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This reaction is surprising to me because the previous comments about its utility seem so obvious to me. I also grew up in the US south where this is often used as a filler word. The other use I observe is as a cushion for a statement that may be unwelcome or hurtful. Perhaps this is proprtional to the frequency of courteous little white lies and rhetoric that uses disengenuity for emphasis or comical effect.

"Honestly, mom, I've never liked your fruitcake. I just ate it to make you happy."

"That's why you're my favorite child! Do you want another piece?"

"I'd love one."

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Yes. Its a red flag that indicates everything else you’ve said is not honest by implication.
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I'd push back on the idea that "honestly" implies previous statements to be dishonest. Particularly in corporate contexts it implies that the previous statements were sanitised - either they were moderated in tone to match corporate communication standards, or they were partial redacted due to disclosure concerns.

Once the "honestly" is deployed, you have passed into my circle of trust, and are now privy to the pure, unvarnished version of events, not the glossy version management expects to be projected towards outsiders.

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This is expected in any level of people management, you are constantly balancing conflicting desires and priorities.
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