HONOLULU (KHON2) — A UHERO report has forecasted that Hawai’i’s economic prospects do not look promising due to a variety of factors influencing the economy statewide and nationally.

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UHERO has found tariffs to be taking a toll on tourism, especially in international markets. Seasonally adjusted arrivals fell 8% between April and July.

UHERO reported real visitor spending is expected to decrease by $600 million and arrivals to be 5% lower than last year by the middle of 2026.

Inflation is expected to rise in correlation with tariffs, lifting the consumer price index to about 4% by the end of next year. By 2026, local prices are expected to rise an average of 1.5%, which can increase an average household’s costs by $1,400 on average annually.

Since March, job growth has halted. Compared to pre-pandemic numbers, employment is 15,000 jobs below. Federal jobs and tourism jobs have seen a large decline, with federal jobs down by more than 1,200.

An industry showing positive trends is in construction. With projects such as the Skyline, Aloha Stadium redevelopment and Maui rebuilding ongoing, the industry is expected to have nearly 40,000 jobs through the end of the decade.

While construction looks promising for employing Hawai’i’s residents, the impact of costs for importing materials due to tariffs is an undetermined risk for the sector.

Condo markets have also started to hurt, being the weakest they have ever been since 2010 due to a combination of high mortgage rates and insurance costs.

The Maui Condo market is seeing resale values down nearly 50% compared to mid-2023, as the market has taken a hit in activity.

This recent activity has shown hesitations when it comes to Bill 9, a proposal to discontinue transient vacation rentals in apartment districts, UHERO said.

UHERO overall expects to see a mild recession near, with hopes of a gradual recovery by late next year. Local impacts could be intensified by a U.S. recession due to high tariffs, stricter immigration policies and federal spending cuts.

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To view the full UHERO report, visit the website.

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