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Surging fuel costs and a parade of storms have slowed Hawaii's economy this year, though relief is expected to come gradually, according to the University of Hawaii Economic Research Organization.
In its latest forecast, UHERO projects the state's economy will grow by 0.6% in 2026, down from more than 3% last year.
"Overall, we expect 2027 to bring gradual economic improvement to the state as energy prices and storm effects recede, although the persistent Middle East conflict remains a primary risk, together with election-related policy uncertainty," UHERO wrote. "Slowly declining population will mean a tepid trend employment path, while AI adoption could provide a potential upside income surprise in the years ahead."
Maui County is a relative bright spot in the forecast. Although job growth has stalled statewide, it is the only county UHERO expects to gain jobs this year. Visitor arrivals on Maui are projected to rise by almost 5% as tourism continues to recover from the 2023 wildfires. UHERO expects that growth to slow to about 2% in 2027 as the recovery progresses.
Statewide, visitor arrivals are forecast to decline by slightly more than half a percent in 2026. Higher fuel costs and storms have hurt travel, particularly on Kauai following Hurricane Lowell.
UHERO expects the average number of visitors in the state on a given day to fall by more than 6%, largely because of shorter reported stays. The researchers cautioned that the unusually sharp change in reported length of stay may reflect problems with the data.
The statewide labor market has also weakened. Job postings have declined, and unemployment has edged up to 2.7%, though it remains low. UHERO forecasts a 0.2% decline in nonfarm payroll jobs this year, followed by growth of just 0.2% in 2027.
The researchers said weak demand for workers, rather than a shortage of available workers, is the main concern.
Income growth on Maui is expected to be much stronger because of compensation tied to the 2023 wildfires. UHERO's model projects a 6% increase in Maui income this year and above-average growth through 2027 as settlement funds are paid out.
However, the forecast reflects income from compensation, rather than a comparable increase in wages or employment.