Research & Economic Analysis

As measured by real gross domestic product (GDP), Hawai‘i’s economy grew 1.8 percent between the final quarter of 2024 and 2025, the latest period for which data is available. In 2025, the state’s economy grew faster than the U.S. economy as a whole. Despite the impacts of severe weather and the ongoing Middle East conflict, Hawai‘i’s economy remains resilient based on year-to-date 2026 data. Growth is expected to moderate, however, with the impacts of higher inflation and slower job growth.

Inflation, as measured by the Honolulu Consumer Price Index for Urban Consumers (CPI-U) was 5.1 percent higher in May 2026 than a year earlier. This is an acceleration from the second half of 2025 when inflation was 2.3 percent. The most important components of the Honolulu CPI-U – Housing, Food and Beverage, and Transportation saw year-over-year increases of 6.3 percent, 2.8 percent, and 4.6 percent, respectively. Honolulu inflation was above the U.S. as a whole, where prices rose 4.2 percent between May 2025 and May 2026.

During the first four months of 2026, Hawai‘i’s labor market held relatively steady. Year-to-date non-agriculture wage and salary jobs was essentially unchanged (0.0 percent) compared to the same period a year ago. Among private sector industries, Construction, Health Care & Social Assistance, Wholesale Trade, and Accommodation sectors drove the growth. The April 2026 not seasonally adjusted unemployment rate stood at 2.5 percent, 0.3 percentage points higher than April 2025 but tied with Iowa as the third lowest in the nation.

Construction, a key driver of the Hawai‘i economy, added 1,400 jobs or 3.5 percent in April 2026 compared to April 2025, with an average increase of 1,200 jobs or 3.0 percent year-to-date. In the first quarter of 2026, government contracts awarded more than tripled year-over-year ($720.1 million or 202.4 percent) due to state paving contracts awarded in February. State capital improvement project expenditures increased $39.9 million (11.8 percent) compared to the first quarter of 2025. Year-to-date April 2026, the value of private residential permits issued decreased 57.2 percent from the same period of 2025.

The visitor industry performed well in the first four months of 2026 considering the impacts of March and April severe weather, with visitor arrivals by air increasing 2.4 percent and visitor expenditures increasing 8.0 percent compared to the same period in 2025. Scheduled air seats, the total number of air seats to Hawai‘i is expected to increase by 5.4 percent between June and August of 2026. This is driven by an increase in domestic airseats, which is 7.7 percent higher than during the same period a year ago. The increase in domestic seats more than offsets the 5.0 percent decline year over year in international air sets to Hawai‘i during June, July, and August.

According to the most recent (June 2026) economic projections by the top 50 economic forecasting organizations published in Blue Chip Economic Indicators, U.S. economic growth is expected to be 2.0 percent in 2026 and in 2027. DBEDT estimates that Hawai‘i’s real GDP will increase by 1.6 percent in 2026. The forecast then projects 1.8 percent growth in 2027, 1.9 percent in 2028, and 1.9 percent in 2029.

Visitor arrivals are projected to increase by 1.9 percent in 2026,  1.3 percent in 2027, and then grow at 1.0 percent each year in 2028 and 2029. Visitor spending is projected to be $22.8 billion in 2026 and to increase to $25.2 billion by 2029.

Non-agriculture payroll jobs are estimated to grow by 0.4 percent in 2026.  The forecast projects increases of 0.5 percent in 2027, 0.6 percent in 2028 and 0.7 percent in 2029.

The state unemployment rate is expected to be 2.4 percent in 2026 and 2027. The unemployment rate will improve to 2.3 percent in 2028 and 2029.

Nominal personal income is estimated to increase by 4.0 percent in 2026. The forecast then projects an increase of 4.3 percent in 2027, and 4.2 percent in 2028 and 2029.

As measured by the Honolulu CPI-U, inflation is expected to be 3.8 percent in 2026, which 0.3 percentage points higher than the 3.5 percent that is projected for the U.S. consumer inflation rate. Hawai‘i consumer inflation is expected to decrease to 2.5 percent by 2029.

Hawai‘i’s population is expected to remain flat in 2026 and then increase by 0.1 percent each year between 2027 and 2029.