State of the Economy
2nd Quarter 2026 Report
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Hawai’i’s major economic indicators were mixed in the first quarter of 2026. The civilian labor force, wage and salary jobs, and private building permit authorizations decreased. Meanwhile, visitor arrivals, government contracts awarded, and general excise tax revenues increased.
In the first quarter of 2026, the construction sector added 1,200 jobs or 3.0 percent compared with the same quarter of 2025, while the permit value for private construction decreased $471.9 million or 33.5 percent. Government contracts awarded increased $720.1 million or 202.2 percent, compared with the same quarter of 2025, largely due to paving contracts awarded by the Hawaii Department of Transportation. According to the most recent data available, the contracting tax base increased $132.9 million or 3.8 percent in the fourth quarter of 2025, compared with the same quarter of the previous year. For 2025, the contracting tax base increased $440.4 million or 3.2 percent compared with the previous year.
In the first quarter of 2026, state General Excise Tax revenue increased $39.6 million or 3.2 percent, the Transient Accommodations Tax (TAT) increased $22.2 million or 9.8 percent, the net corporate income tax revenues increased $13.0 million, and the Net Individual Income Tax revenues increased $21.0 million or 3.6 percent.
Labor market conditions were mixed. In the first quarter of 2026, the civilian labor force averaged 687,250 people, a decrease of 2,550 or 0.4 percent over the same period of 2025. The unemployment rate (not seasonally adjusted) was 2.2 percent, 0.2 of a percentage point lower than the first quarter of 2025. Hawai‘i’s non-agricultural wage and salary jobs averaged 642,900 jobs, a decrease of 800 jobs or 0.1 percent from the same quarter of 2025.
In the first quarter of 2026, the private sector added about 2,300 non-agricultural jobs compared to the first quarter of 2025. The number of jobs increased the most in Health Care & Social Assistance, which added 1,400 jobs or 1.8 percent, followed by Construction, which added 1,200 jobs or 3.0 percent, Accommodation, which gained 500 jobs or 1.3 percent,and Food Services and Drinking Places, which added 400 jobs or 0.6 percent.
The job decrease in the first quarter of 2026 was due to job decreases in the government sector. The Government sector lost 3,100 jobs or 2.4 percent in this quarter compared to the same quarter of 2025. The Federal Government lost 3,200 jobs or 9.0 percent, the State Government lost 500 jobs or 0.7 percent, and the Local Government added 600 jobs or 3.1 percent, compared to the first quarter of 2024.
In the fourth quarter of 2025, total annualized nominal GDP increased $7,258 million or 6.1 percent, from the same quarter of 2024. In 2025, total annualized nominal GDP increased $6,980 million or 5.9 percent from the previous year. In the fourth quarter of 2025, total annualized real GDP (in chained 2017 dollars) increased $1,625 million or 1.8 percent from the same quarter of 2024. In 2025, total annualized real GDP increased $2,266 million or 2.5 percent from the previous year.
In the fourth quarter of 2025, total non-farm private sector annualized earnings increased $2,809.4 million or 3.9 percent from the same quarter of 2024. In dollar terms, the largest increase occurred in Health Care and Social Assistance; followed by Professional, Scientific, and Technical Services, and Accommodation and Food Services. During the fourth quarter of 2025, total government earnings increased $631.0 million or 3.2 percent from the same quarter of 2024. Earnings from the federal government increased $329.1 million. Earnings from the state and local governments increased $302.0 million in the quarter.
In the second half of 2025, Honolulu’s Consumer Price Index for Urban Consumers (CPI-U) increased 2.3 percent from the same period in 2024 (Table B-14). This is 0.5 percentage points below the 2.8 percent increase for the U.S. CPI-U All Items. It is also lower than the 4.0 percent increase in the Honolulu CPI-U for the second half of 2024 compared to the same period of the previous year. In the second half of 2025, the Honolulu CPI-U increased the most in Food and Beverages (3.8 percent), followed by Recreation (3.3 percent), Medical Care (3.1 percent), Apparel (2.2 percent), Housing (2.1 percent), Transportation (2.0 percent), and Education and Communication (0.7 percent) compared to the second half of 2024.
