Hawaii’s economic growth forecast for 2025 has been lowered to 1.2% from the earlier estimate of 1.7%. The report cites tariffs on imports, a slowdown in tourism, inflation, and uncertain economic policies as reasons for the revision. The state’s labor market ranks fifth-lowest in unemployment on a seasonally adjusted basis, and labor force and employment levels have returned to the levels of April 2019, according to the Hawaii Department of Business, Economic Development, and Tourism.
Construction in Hawaii grew with a 17.8% increase in the 2024 contracting tax base compared to 2023. Private building permits in the first quarter of 2025 rose by 39.9%, and authorized residential units increased by nearly 90%. Home sales fell by more than 25%, average prices for single-family homes went up, while condominium prices decreased slightly. Tourism in the first quarter of 2025 showed an increase in visitor arrivals and spending from the U.S., but a decrease in visits from Japan, Canada, and other international markets. Air seat capacity to Hawaii is expected to decline slightly, mainly due to fewer international flights, as reported by the Hawaii Department of Business, Economic Development, and Tourism.
Inflation in Honolulu decreased from 4.1% in January to 2.6% in March, with food and beverage prices increasing the most. “Although Hawaii faces short-term economic challenges — including softening tourism, inflationary pressures and continued uncertainty in global markets — we remain confident in the state’s long-term economic resilience and are optimistic to see that most of our industry sectors are adding jobs,” said Hawaii Department of Business, Economic Development, and Tourism Director James Kunane Tokioka. The state expects steady economic growth, with possible acceleration in 2026, modest increases in visitor arrivals and spending through 2028, and full job recovery by that time. Personal income is forecast to grow each year, and inflation rates are expected to gradually decline.
