Hawaii is bracing for a "mild recession" in 2026, according to a recent analysis by the University of Hawaiʻi Economic Research Organization (UHERO). The economic downturn is influenced by a confluence of factors, some stemming from national and global policy decisions. However, as the Honolulu Star-Advertiser highlighted in a recent letter, the choices of local consumers and business owners play a crucial role in mitigating the impact of the recession and fostering a more resilient economy.
This predicted economic slowdown presents challenges for various sectors across the islands. Tourism, a cornerstone of Hawaii's economy, is anticipated to face headwinds, with a potential drop in visitor numbers. UHERO's May 2025 forecast indicates that a drop in visitor spending is almost certain. This downturn will likely affect employment in visitor-related industries, as well as the broader economy. Beyond tourism, rising interest rates and inflation are expected to impact consumer spending and investment decisions, adding further strain.
Amidst these challenges, there are actions that can be taken at the local level to bolster the economy. One of the most effective is supporting local businesses. According to various analyses, including reports from the Maui Chamber of Commerce, construction businesses on Maui are doing well, but visitor-related businesses are facing difficulties. Purchasing goods and services from local vendors keeps money circulating within the state, supports local jobs, and strengthens the overall economic ecosystem. This strategy helps local entrepreneurs maintain their operations even during tighter economic times.
In addition, prudent financial practices can help individuals and businesses navigate the economic downturn. As noted by the Honolulu Star-Advertiser letter writer, using cash can help to curb overspending and manage budgets more effectively. This can be particularly helpful during times of rising prices. Additionally, business owners might want to explore strategies for cost control, perhaps by reviewing operating expenses or looking into government assistance programs available to small businesses. Combining careful spending with supporting local businesses creates a two-pronged strategy for navigating the recession.
