Despite economic headwinds, new forecasts suggest a brighter outlook for Hawaii's economy. According to a recent report, the state Department of Business, Economic Development and Tourism predicts a 1.5% expansion next year, following a 1.2% growth this year. This positive outlook offers a glimmer of hope for local businesses and entrepreneurs navigating the current economic climate.
This optimistic forecast is particularly relevant given the anticipated challenges. A University of Hawaii News report highlights concerns about a potential mild recession due to Federal Reserve policies. The report also mentions a near 1% contraction in employment for 2026, particularly within the public sector and visitor-related jobs. However, the new forecast suggests that these negatives may be offset by other economic drivers.
For Hawaii's entrepreneurs, this forecast signals potential opportunities for growth. Businesses that can adapt to changing market conditions and focus on diverse revenue streams are likely to thrive. Furthermore, the tourism sector, a cornerstone of Hawaii's economy, is expected to see a full recovery of visitor arrivals by 2028, according to the UH News report. This recovery could provide a boost to businesses tied to tourism, like small retailers and restaurants.
Investors looking at Hawaii should consider this cautiously optimistic outlook. While the forecast predicts growth, it's important to monitor the potential impact of rising inflation, as the Honolulu CPI is forecast to exceed 4% in 2025 and 2026, as indicated by the UH News report. Investors should exercise due diligence in assessing the risk and rewards of investments in the state, considering the broader economic trends. Despite the challenges, Hawaii’s persistent tourism appeal, combined with strategic investments and entrepreneurial innovation could drive a stronger economic rebound.
Finally, a report from the State of Hawaii - Dept. of Business, Economic Development & Tourism shows that the February unemployment rate remained at 3.0 percent, showcasing consistent job market stability in Hawaii.
