The Department of Business, Economic Development, and Tourism (DBEDT) has slashed Hawaii's economic growth outlook for 2025, dialing it back to 1.7 percent from the previously anticipated 2.0 percent. According to their latest Statistical and Economic Report, this revision reflects a cocktail of challenges including a tourism slowdown, rising consumer inflation, and increased national and international policy uncertainty. While this paints a tepid picture for the immediate future, DBEDT expects the state will manage to ramp up its growth to around 1.8 percent by 2028.
Hawaii's economic heartbeat, traditionally paced by tourism, is still fluttering under pre-pandemic levels, with tourism-related sectors hitting just 94.5 percent of their former vitality as of the third quarter of 2024. However, other industries show signs of robust health, like a 35.1 percent growth in the Information sector and a 25.0 percent boom in Professional, Scientific, and Technical Services compared to late 2019 figures. Despite these gains, statewide non-agriculture payroll jobs remain down by 20,900 positions from 2019's count, with retail feeling the brunt of this attrition, losing 6,900 jobs, according to a Department of Business, Economic Development, and Tourism report.
But not everything in the Aloha State is simmering down. The construction industry is practically basking in a prolonged Hawaiian summer, celebrating 2024 as a banner year. With a 27.1 percent year-over-year bump in building permits and a striking 78.1 percent leap in the number of sanctioned residential housing units, these figures represent the most active the state has seen in nearly two decades. As detailed by DBEDT's findings, these projects, poised to roll out in 2025, are expected to inject further momentum into the construction sector's trajectory.
Home sales, meanwhile, are heating up with a 15.1 percent spike in transactions throughout 2024, featuring a significant appreciation in home prices. Single-family homes' average sale price notched an 8.1 percent increase, climbing to over the million-dollar mark, while condominium homes nudged up by 5.7 percent compared to the prior year. And while the tourism sector might be decelerating, housing and construction markets are certainly bustling with activity, as noted by DBEDT.
As for the labor market, Hawaii is touting a relatively healthy scene. With an unemployment rate that dipped slightly to 2.9 percent in 2024 and a modest increase in non-agricultural wage and salary jobs, the labor conditions seem stable. DBEDT anticipates this stability to hold as we march through 2025, with a possibility of the unemployment rate further improving. The average number of weekly initial unemployment claims also fell in 2024, signaling a more secure employment landscape amid economic headwinds.
Digging into the cost of living, Honolulu's consumer inflation spiked to 4.4 percent in 2024, outpacing the national rate. In particular, the costs of housing, transportation, and food and beverages soared, reflecting a pressure point for residents grappling with steeper prices in basic needs. Looking ahead, Hawaii faces the challenge of containing these consumer costs while nurturing the economic growth that has indeed shown resilience thus far, as suggested by the DBEDT director James Kunane Tokioka's statements, expressing expectation for the state's economy to demonstrate resiliency buoyed by sectors such as construction, professional services, and healthcare.
