HONOLULU (HawaiiNewsNow) – Hawaii economists are forecasting rising costs for residents and uncertainty for the state’s tourism industry.
According to the University of Hawaii Economic Research Organization, Hawaii’s economic outlook has darkened as a war involving Iran pushes global oil prices higher, raising costs for residents and travelers and adding uncertainty for the state’s tourism-dependent economy.
“I think one of the main takeaways this quarter is really no one knows where things are going in the Persian Gulf, how long this is going to take,” said UHERO Executive Director Carl Bonham. “Local families can expect just about everything to cost more.”
UHERO’s second-quarter 2026 forecast said the state is still recovering from damage caused by March Kona Low storms, while job growth remains sluggish.
While economists say a recession is unlikely, the short-term outlook of Hawaii’s economy has worsened.
UHERO projected U.S. economic growth of 1.7% in 2026, with inflation at 4%, warning higher energy costs could offset gains from federal tax cuts.
The report also said Japan, and other oil-dependent Asian economies, face added pressure, and Canada remains weakened by ongoing trade tensions with the U.S.
2026 began with some momentum for the tourist industry before the March Kona Law storms led to lower passenger counts, according to the UHERO report.
UHERO projected that visitor arrivals will increase about 2% in 2026, before slowing to 0.2% growth in 2027, citing continued declines from Canada and reduced purchasing power among Japanese visitors.
The UHERO report showed that Hawaii’s labor market has been stable but somewhat slow, noting statewide payroll growth was essentially unchanged through February and the labor force has contracted slightly.
Federal employment has fallen by more than 3,000 jobs in the past year, while construction and health care were among the strongest areas, the report said.
Construction is expected to stay strong because of federal contracts, rebuilding from Maui wildfires, and work tied to the $4 billion New Aloha Stadium Entertainment District.
The housing market remains soft, the report said, with the median single-family home price holding near $1 million for seven months amid slow resales and slipping condominium prices.
UHERO said insurance premiums, already up since the Maui wildfires, could rise further after the March storms.
Copyright 2026 Hawaii News Now. All rights reserved.