Hawaii Economic Growth Slowed in 2026
Researchers projected a decline in growth as natural disasters and inflation impacted the state economy.
Updated on Sept. 25, 2026 in Employment
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University of Hawaii researchers have projected that the state's economic growth will fall to 0.6% in 2026, down significantly from 3.3% in 2025. This downturn is attributed to a combination of persistent inflation and damage from a series of natural disasters.
Why it matters
The state faces ongoing economic pressure as high energy costs driven by the war in Iran and recurring natural disasters disrupt tourism and local businesses. These factors have constrained growth despite a 2.7% unemployment rate as of August 2026.
The projected 0.6% economic growth for 2026 follows a 2025 growth rate of 3.3%. Officials have estimated $686 million in disaster repair costs after more than 1,000 homes were damaged.
The players
University of Hawaii
This is a public research university that provides economic forecasting and data analysis for the state.
Josh Green
He serves as the Governor of Hawaii and oversees the state response to disaster relief and recovery efforts.
The details
Oahu recorded an inflation rate of 5.6% during the 12 months ending in July 2026, while tourism has suffered from an estimated drop of 65,600 visitor arrivals. Disruption has been exacerbated by a series of events, including an earthquake in May and multiple hurricanes throughout the year.
Timeline
March 2026 saw a pair of Kona-low storm systems affect the region.
A magnitude-6.0 earthquake struck Hawaii island in May 2026.
Hurricane Lala impacted the state in August 2026.
Hurricane Lowell made landfall on Kauai on September 7, 2026.
Tropical Storm Nolo is expected to pass Hawaii island on September 26, 2026.
Macro View
The current economic slowdown marks a sharp departure from the 2025 Hawaii economic growth rate of 3.3%. This trajectory reflects a cyclical downturn driven by external shocks rather than internal policy shifts.
Residents may see continued volatility in their cost of living due to the 5.6% inflation rate recorded on Oahu. The combination of disaster recovery costs and tourism slumps could lead to tightening local budgets for families and businesses.
The takeaway
The state's economic outlook is currently tethered to its ability to recover from a high volume of consecutive natural disasters and external inflationary pressures. Preparing for seasonal weather disruptions remains a critical necessity for both residents and local businesses.
Further reading
For more information on the state labor market, visit Employment.
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