Research & Economic Analysis

Hawai‘i’s economy strengthened in the first quarter of 2025 compared with the same quarter in 2024. Overall economic activity is now 1.8 percent above pre-pandemic levels recorded in late 2019. Several tourism-related industries (accommodation, food services, transportation, and recreation) remain below pre-pandemic levels. Non-tourism industries such as professional services, health care, and information have helped offset the uneven rebound in visitor-related industries.

After growing in the first half of 2025, the visitor industry faces mid-year challenges. In the first half of 2025, visitor arrivals by air and cruise ship increased 2.3 percent, or 109,650 compared to the same period in 2024. Visitor spending by air and cruise ship rose to $11.0 billion, up 6.5 percent. However, July visitor arrivals and spending declined compared to July 2024.

The construction industry continued to expand through July 2025. The average construction payroll job count was 40,000 during the first seven months of 2025, a 2.8 percent increase compared to the same period last year. The value of private building permits increased 33.4 percent during the first seven months of 2025. Government contracts increased 31.2 percent in the first half of the year. State government capital improvement project (CIP) expenditures, however, declined by 11.2 percent over the same period.

Based on the most recent data from the U.S. Bureau of Economic Analysis, Hawai‘i’s real gross domestic product (GDP) grew 1.5 percent in the first quarter of 2025 compared to the first quarter of 2024. Personal income grew by 4.4 percent in the first quarter of 2025 compared to the first quarter of 2024.

Hawai‘i’s labor market continued to be strong through July 2025, building on steady gains in recent quarters. The civilian labor force and employment both expanded, while unemployment and the jobless rate declined. Non-agricultural wage and salary jobs rose by 2.1 percent in the first seven months of 2025 compared to the same period in 2024. Recent federal job losses have been offset by private sector and state and local government job gains. In July, the State had the third lowest unemployment rate (not seasonally adjusted) in the nation, tied with North Dakota.

State general excise tax collections increased by 5.9 percent in the half of 2025 (latest data available) compared to the same period a year ago.

Inflation, as measured by the Honolulu Consumer Price Index for Urban Consumers (CPI-U), has decreased from 4.1 percent in January 2025 to 2.3 percent in July. DBEDT expects inflationary pressures to intensify in the second half of 2025 and into early 2026 as the effects of heightened tariffs make their way through the economy, before easing in 2027.

At the national level, the most recent (August 2025) Blue Chip Economic Indicators report, the consensus of 50 economic forecasting organizations, projected the  U.S. economy to grow at 1.6 percent in 2025, and 1.5 percent in 2026.  DBEDT estimates that Hawai‘i’s real GDP will increase by 1.3 percent in 2025, 1.4 percent in 2026, 1.6 percent in 2027, and 1.8 percent in 2028.

Visitor arrivals are projected to remain stable in 2025 and will improve starting in 2026. Visitor spending is projected to be $21.2 billion in 2025 and is expected to increase to $23.0 billion by 2028.

Non-agriculture payroll job growth is expected to increase by 1.4 percent in 2025 and then by 0.9 percent each year between 2025 and 2028. A full recovery of non-agriculture payroll jobs is expected to occur in 2027 when the total will reach 659,700 jobs.

The state unemployment rate is expected to be 2.9 percent in 2025 and 2026 and will improve to 2.8 percent in 2027 and 2.7 percent 2028.

Personal income is expected to grow at 4.5 percent in 2025, 4.4 percent in 2026, and 4.3 percent per year in 2026 and 2027.

As measured by the Honolulu Consumer Price Index for Urban Consumers, inflation is expected to be at 3.0 percent in 2025, which is higher than the projected U.S. consumer inflation rate of 2.8 percent for the same year. Hawai‘i consumer inflation is expected to decrease to 2.2 percent by 2028.

Hawai‘i’s population is expected to increase by 0.1 percent each year between 2025 and 2028.
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