Hawaii 2026 Growth Forecast Halved to 1.3 Percent

Hawaii's 2026 economic growth forecast is cut to 1.3 percent. This is down from the previous 2.5 percent estimate. The Department of Business, Economic Development and Tourism released the figure on September 10. The revision reflects rising costs and softer labor data.

Inflation pressures drive the lower outlook. Energy prices rose 22.5 percent in the first half of 2026. The department expects the growth rate to rise to 1.6 percent in 2027. It should reach 1.8 percent by 2029.

Labor Market Shows Limited Momentum

Nonagricultural employment reached 642,700 jobs in July 2026. This marks a 0.2 percent increase over the prior year. The unemployment rate climbed to 2.7 percent. The labor force expanded slightly while total jobs held steady.

Construction added 1,300 jobs in the first seven months. Health care and social assistance added 2,100 jobs. Private sector gains offset a 2,200 job loss in government. Federal government employment dropped 3,000 jobs on Oahu.

Inflation Remains Above Historical Norms

The consumer price index rose 5.6 percent year over year. Core inflation excluding food and energy stood at 4.8 percent. Services prices increased by 6.8 percent. Energy costs jumped 22.5 percent over the same period.

Price increases slowed between May and July. The all-items index rose only 0.1 percent in two months. Energy prices fell 5.1 percent during that span. The department projects average inflation of 4.4 percent for 2026.

Income Growth Slows Due to Base Effect

Real personal income growth is projected at 0.6 percent. This is lower than the 3.9 percent seen in 2025. The 2025 baseline included high Maui wildfire settlement payments. Reversing these one-time payments lowers the 2026 growth rate.

Nominal personal income is expected to reach $114.1 billion. This represents a 4.0 percent increase. GN markets/jobs (en-US) notes that recurring income sources remain stable. The decline is tied to the removal of temporary transfer payments.