The Department of Business, Economic Development and Tourism (DBEDT) announced on March 12 that Hawaii’s economy is projected to grow by 1.7 percent in 2026, following an estimated growth of 2.6 percent in 2025. The department also forecasts a further increase of 1.8 percent for the year 2027.
This economic outlook comes as Hawaii continues to show resilience with strong labor market conditions, rising incomes, and steady visitor spending, despite ongoing uncertainties related to federal policy and international developments.
According to the report, Hawaii’s civilian labor force reached 690,050 in December 2025, marking a year-over-year increase of 1.2 percent. Civilian employment rose by nearly 11,850 jobs over the same period. The state’s not seasonally adjusted unemployment rate dropped to 2.2 percent in December 2025 compared to the previous year’s rate of 2.8 percent, while the national average increased slightly to 4.1 percent.
In terms of income growth, Hawaii’s nominal gross domestic product (GDP) increased by $6.7 billion or 5.7 percent in the third quarter of 2025 compared with a year earlier. Personal income also grew during this period, with per capita personal income reaching $74,830—a rise of about 4.6 percent from the previous year.
Visitor spending remained robust even as total arrivals declined by about three percent in late-2025 due mainly to fewer domestic travelers; however, expenditures by air visitors reached $21.7 billion for all of last year—an increase from prior levels—and hotel occupancy rates improved modestly.
Construction activity saw notable gains with employment up nearly seven percent and government contracts awarded increasing almost twenty-five percent in late-2025 compared with a year earlier.
The DBEDT report notes that inflationary pressures have moderated locally: Honolulu’s Consumer Price Index for Urban Consumers rose just over two percent during the second half of last year—below national averages—but global risks such as energy price shocks remain sources of uncertainty for future projections.
Hawaii’s state government has been active on several fronts including supporting communities affected by wildfires and honoring veterans and educators according to the official website. Efforts are also underway to expand healthcare access and address homelessness through housing programs according to the official website. The governor’s office serves all regions across Hawaii—including wildfire-impacted areas like Lahaina—and influences policy through tax reform measures aimed at affordability and framing homelessness as a health care issue according to the official website.
Collaboration with various entities is ongoing to advance renewable energy initiatives and combat climate change according to the official website. State governance continues emphasizing public policy on issues such as housing and climate change according to the official website.
Looking ahead, DBEDT expects moderate but steady economic expansion through at least 2029 driven by gradual increases in visitor activity, continued service sector growth, lower inflation rates, and stable employment figures.
