Hawaii\u2019s economy continues to head toward a mild recession in 2026, driven
\nprimarily by the overall U.S. economy, President Donald Trump\u2019s ongoing tariffs, cuts in federal spending and deportations, according to the fourth quarter economic forecast released today by the University of Hawai\u2018i Economic Research
\nOrganization.<\/p>\n
Combined with Hawaii\u2019s sluggish tourism industry and expected slowdown in job hiring, \u201call of those come together to produce an overall weak economy,\u201d said Carl Bonham, UHERO\u2019s executive director.<\/p>\n
UHERO\u2019s economic expectations mirror its previous forecasts for 2025 even before the record-long, 43-day federal government shutdown began on Oct. 1, disrupting pay for many of Hawaii\u2019s approximately 34,000 federal workers.<\/p>\n
The shutdown reduced household spending in Hawaii and \u201clikely weakened visitor demand temporarily, adding short-term drag to the local economy,\u201d UHERO said. \u201cSome, but not all, of the shutdown-related spending hit will be reversed as federal workers receive back pay.\u201d<\/p>\n
It also caused panic among Hawaii\u2019s 161,132 SNAP recipients, who represent 81,124 families, and led to long lines at food distribution centers.<\/p>\n
But it did not play a major role in UHERO\u2019s last forecast for 2025, Bonham said.<\/p>\n
Don’t miss out on what’s happening!<\/strong><\/p>\n Stay in touch with breaking news, as it happens, conveniently in your email inbox. It’s FREE!<\/p>\n While the shutdown didn\u2019t help Hawaii\u2019s economy, Bonham said it was \u201cjust piling on.\u201d<\/p>\n Tourism has been sluggish all year, which will likely continue into 2026.<\/p>\n And the New Year will see Hawaii\u2019s minimum wage jump from $14 an hour to $16, which will likely cause employers to rethink hiring and overall payroll costs, Bonham said.<\/p>\n The higher minimum wage also will affect entry-\u00adlevel employees seeking their first jobs and people trying to rejoin the workforce, Bonham said.<\/p>\n \u201cBecause it\u2019s happening when the economy\u2019s going to be weak, it makes it difficult\u201d for both employers and employees, Bonham said.<\/p>\n Overall, according to UHERO, \u201cHawai\u2018i\u2019s labor market shows clear signs of slowing. Job postings have fallen, opportunities have narrowed, and federal layoffs will continue into 2026.\u201d<\/p>\n Businesses also will continue to pass the costs of President Donald Trump\u2019s tariff wars onto consumers and inflation in Hawaii should peak at 3.5% by the middle of the year, Bonham said.<\/p>\n This year ends with a few economic bright spots.<\/p>\n Maui\u2019s recovery from the Aug. 8, 2023, deadly wildfires continues to outpace Oahu and Hawaii island.<\/p>\n Room rates and occupancy are still down, but overall visitor spending was up 12% on Maui in \u201cIn some ways, Maui is recovering faster than the Big Island and Oahu,\u201d he said. \u201c\u2026 Maui\u2019s not hit quite as hard because there\u2019s this offsetting of people beginning to return.\u201d<\/p>\n And construction remains hot, driven by \u201cNew federal projects, including an $8 billion Navy contract and progress on Aloha Stadium redevelopment, will keep construction employment near record levels through the decade\u2019s end,\u201d UHERO said. \u201cThis will help cushion the downturn but cannot fully offset weakness elsewhere in the economy.\u201d<\/p>\n Overall for Hawaii tourism, UHERO said that, UHERO\u2019s last economic forecast for 2025 offers no new surprises for the upcoming legislative session, which begins Jan. 21.<\/p>\n Before it begins, legislators will closely watch the Hawaii Council on Revenues\u2019s economic forecast coming out in the first week in January, which legislators rely on to set their budget expectations.<\/p>\n Bonham, who sits on the Council on Revenues, said that legislators will have to grapple with the \u201crecognition that the economy is overall weak and tax collections are weak,\u201d Bonham said. \u201cAny way you cut it, it\u2019s going to be a challenging session.\u201d <\/p>\n By 2027, according to UHERO, \u201cHonolulu consumer prices will be about 1.5% higher than they would have been without recent tariff hikes, raising annual costs for a typical Hawai\u2018i household by about $1,400.<\/p>\n \u201cJob and income losses will be real but limited in scale, with the greatest burdens falling on lower-\u00adincome households and sectors tied to tourism and federal spending,\u201d the UHERO forecast said. \u201cSignificant uncertainties remain \u2014 from trade policy and deportations to the ability of the Federal Reserve to steer the national economy \u2014 but prospects look somewhat better than they did earlier this year.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Hawaii\u2019s economy continues to head toward a mild recession in 2026, driven primarily by the overall U.S. economy,…\n","protected":false},"author":3,"featured_media":442723,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[64,79,4582,67,132,68],"class_list":{"0":"post-442722","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-editors","11":"tag-united-states","12":"tag-unitedstates","13":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115707622622638595","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/442722","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=442722"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/442722\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/442723"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=442722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=442722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=442722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nOctober compared to the year before, Bonham said.<\/p>\n
\nongoing housing and
\ninfrastructure projects.<\/p>\n
\n\u201cInternational markets remain weak, with Canadian visitors down sharply. There has been a welcome recent uptick in the number of Japanese visitors, which nevertheless remains well below its pre-pandemic level. Visitor arrivals and average daily census are expected to
\ndecline in 2026 before
\nrecovering in 2027-28.\u201d<\/p>\n