Hawaii's economy is heading towards a mild recession in 2026, according to a recent forecast by the University of Hawaii Economic Research Organization (UHERO), impacting businesses and residents across the islands. The forecast anticipates job losses in multiple sectors, driven by a decline in tourism and rising inflation, creating challenges for entrepreneurs, investors, and professionals alike.
UHERO's analysis highlights the dependency of the state's economy on tourism, noting that the downturn in visitor numbers will significantly contribute to the economic slowdown. The report states, "In Hawaii, visitor numbers are down, job growth has stalled, and housing activity remains weak." This trend will likely affect employment across various industries, potentially leading to increased uncertainty for business owners and investors who rely on the tourism sector.
However, the UHERO forecast released in December 2025 also points to some resilience within the construction industry. The report suggests that construction remains "the only major source of strength, supported by large federal contracts and other public projects." This suggests that while other sectors might face contraction, opportunities could persist for construction-related businesses.
The implications of this forecast are significant for Hawaii's business community. Entrepreneurs may need to reassess their strategies, focusing on diversification and cost management to navigate the expected recession. Investors should carefully evaluate their portfolios, considering the potential impacts on tourism-related assets and exploring opportunities in the construction sector. Professionals across industries should anticipate potential shifts in the labor market and prepare for increased competition.
For further details, the full UHERO report provides a comprehensive overview of the economic challenges ahead and can be accessed on the Pacific Business News website. Additional insights into the economic factors are available through University of Hawaii News, offering a deeper understanding of the underlying trends.
