Univ of Hawaii: State to See Mild Recession in 2026

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The most recent forecast by the University of Hawaii Economic Research Organization (UHERO) calls for continued weakness in the state’s economy in 2026 as US tariff and trade policies impact Hawaii's tourism industry. UHERO projects a 0.4% decline in state nonfarm payrolls in 2026, and a corresponding increase in the state’s unemployment rate to 3.6% from an estimated 3.0% in 2025. Both Hawaii’s real GDP and real personal income are expected to be flat in 2026, increasing only 0.1% y/y. UHERO also forecasts a 0.1% decline in the state’s population next year. The forecast points to the state’s tourism sector as a significant contributor to this projected economic weakness, with tariff and trade issues impacting the economies of key visitor markets like Canada and Japan. UHERO expects a decline in total air passengers of 1.1% in 2026 after an estimated 1.3% drop in 2025, and a decrease in real visitor expenditures of 5.8% in 2026 compared to an estimated 1.4% decline in 2025.


You can find a link to the full forecast report here.

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