fourth quarter forecast for 2025<\/a>, reporting that a downturn in tourism, and anticipated job losses, are edging the island economy into mild recession.\u00a0<\/p>\n\u201cInflation, while currently low, will rise next year as tariffs continue to pass through to consumer prices,\u201d a University of Hawai\u02bbi news release on the UHERO report stated. \u201cConstruction remains the one consistently strong sector, supported by major new federal contracts and ongoing housing and infrastructure needs.\u201d\u00a0\u00a0<\/p>\n
UHERO Executive Director Carl Bonham summarized the 2025 fourth quarter forecast report in a YouTube video.\u00a0<\/p>\n
UHERO Focus: 2025 Q4 Forecast (UHERO on YouTube)\n<\/p>\n
UH provided these \u201cmajor takeaways\u201d of the December 12 report:<\/p>\n
Tourism in Hawai\u02bbi has softened this year. O\u02bbahu has seen notable declines, while Maui continues its gradual recovery from the 2023 wildfires. International markets remain weak, with Canadian visitors down sharply. There has been a welcome recent uptick in the number of Japanese visitors, which nevertheless remains well below its pre-pandemic level. Visitor arrivals and average daily census are expected to decline in 2026 before recovering in 2027\u201328.
\nHawai\u02bbi\u2019s labor market shows clear signs of slowing. Job postings have fallen, opportunities have narrowed, and federal layoffs will continue into 2026. Still, unemployment remains low, and the overall cooling has been gradual. The upcoming minimum wage increase to $16 in 2026 will boost incomes for many lower-wage workers, but could create cost challenges for some employers.
\nInflation will build over the next year as tariffs continue to flow through to consumer prices, peaking around 3.5% in late 2026 before gradually easing. By 2027, Honolulu consumer prices will be about 1.5% higher than they would have been without recent tariff hikes, raising annual costs for a typical Hawai\u02bbi household by about $1,400.
\nThe federal shutdown disrupted pay for many of Hawai\u02bbi\u2019s roughly 34,000 federal employees and caused SNAP and other federal programs to lapse as funds ran out. The state provided limited emergency assistance to cushion the gap in social programs, but the shutdown still reduced household spending and likely weakened visitor demand temporarily, adding short-term drag to the local economy. Some, but not all, of the shutdown-related spending hit will be reversed as federal workers receive back pay.
\nConstruction remains a rare bright spot. New federal projects, including an $8 billion Navy contract and progress on Aloha Stadium redevelopment, will keep construction employment near record levels through the decade\u2019s end. This will help cushion the downturn but cannot fully offset weakness elsewhere in the economy.
\nThe U.S. economy strengthened in the third quarter as consumer spending rebounded, supported in part by strong stock market gains. But underlying conditions remain mixed: household budgets are stretched, long-term interest rates remain high, and the record-long federal government shutdown reduced income and delayed critical economic data. Job creation nationally has slowed sharply, and unemployment has risen. U.S. and global economic prospects remain relatively poor.
\nOverall, UHERO expects a mild recession in Hawai\u02bbi followed by a weak recovery starting in 2026.<\/p>\n
\u201cJob and income losses will be real but limited in scale, with the greatest burdens falling on lower-income households and sectors tied to tourism and federal spending,\u201d the UHERO forecast stated. \u201cSignificant uncertainties remain\u2014from trade policy and deportations to the ability of the Federal Reserve to steer the national economy\u2014but prospects look somewhat better than they did earlier this year.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"(BIVN) \u2013 Hawai\u02bbi faces a mild recession with a weak economic recovery in 2026, experts say.\u00a0\u00a0 The University…\n","protected":false},"author":2,"featured_media":345146,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101],"class_list":{"0":"post-345145","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/345145","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=345145"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/345145\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/345146"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=345145"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=345145"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=345145"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}