As someone who loves watching Hawaii grow and change, I’m always curious about what’s ahead for our local economy.
Will jobs get better? Will costs go up? These questions matter to me and to everyone who calls Hawaii home.
Experts see steady improvement in Hawaii’s economy since the pandemic, but they warn that real risks of a downturn remain in the next few years. Tourism drives much of our economy, but it hasn’t fully recovered, and challenges like inflation and federal policy changes add to the uncertainty.
I want to know what areas have the best chances for growth and what challenges we need to watch out for.
If you’re also wondering what the future holds for Hawaii’s jobs, businesses, and families, keep reading—there’s a lot to talk about.
Current State of Hawaii’s Economy
Right now, Hawaii’s economy grows slowly and faces a mix of strengths and challenges.
Tourism is recovering, but some industries still struggle, and job growth has not reached pre-pandemic levels.
Economic Indicators
The state’s Department of Business, Economic Development and Tourism (DBEDT) expects Hawaii’s 2025 real GDP to grow by about 1.2%. This number is lower than last year’s 1.7% growth and shows weaker economic momentum.
U.S. economic growth should remain low, with a 1.2% rate in 2025 and a slight rise in 2026, based on Blue Chip Economic Indicators.
Federal policy changes, inflation, and global events continue to affect the state. Tourism and other important areas like agriculture are adapting to new conditions.
Oahu and Honolulu play key roles as economic centers and remain crucial for growth.
Major Industries
Tourism remains central to Hawaii’s economy, but recovery has slowed. Flights from the mainland United States are expected to rise only a little this year.
Agriculture and defense also support the economy, but they are not growing fast enough to offset weaker tourism.
Healthcare, renewable energy, and technology sectors are trying to expand. Because tourism dominates, setbacks in visitor numbers have a big impact on the state’s finances.
Hawaii needs smarter investment in non-tourism industries to support jobs and protect the state’s economy.
Labor Market Overview
Hawaii’s job recovery after the pandemic trails the national average. The unemployment rate has dropped but is still higher than in most U.S. states.
Slow job growth is causing some residents to leave for better opportunities elsewhere. Hiring in tourism and related businesses lags, while other industries like healthcare and defense help but don’t provide enough new jobs.
Many small businesses struggle to find workers and stay open, which pressures local communities and families.
Honolulu and Oahu remain the main job hubs, but growth there has also slowed, according to the latest reports from DBEDT.
Tourism and Its Evolving Role
Tourism in Hawaii is changing. As travel and spending patterns shift, I see the economy and local communities adapting to new realities.
Recent Trends in Visitor Arrivals
Visitor arrivals in Hawaii go up and down. After the pandemic, travelers started returning, but recovery remains uneven.
In February 2024, 772,480 visitors arrived, only slightly more than the 753,750 in February 2023.
International tourists, especially from Japan and Canada, return more slowly than expected. Airline schedules and available seats affect these numbers.
Some reports say a full tourism recovery may not happen until 2027. Visitors now prefer less crowded destinations and sustainable experiences, which also shapes future travel to the islands.
You can read more about this trend in visitor arrivals at this Hawaii tourism industry update and the discussion on tourism recovery delays.
Tourism Sector Diversification
Traditionally, Hawaii’s tourism focused on beach vacations and resorts. Now, I notice more focus on eco-tourism, cultural activities, and adventure travel.
Local businesses and tour operators create new experiences to match changing visitor interests. Demand is growing for sustainable tours, Hawaiian cultural classes, and small-group activities.
This shift spreads tourism’s benefits across more sectors and helps local communities. It also helps Hawaii’s tourism industry handle unexpected disruptions.
You can read about how tourism is shifting here.
Visitor Expenditures and Economic Impact
Visitors spend a lot in Hawaii. In February 2024, total visitor spending reached $1.66 billion, up slightly from $1.64 billion the previous year.
Per-person daily spending rose a little, supporting jobs in hotels, restaurants, and attractions. Tourism affects construction, transportation, and retail across the islands.
With slower growth in arrivals, officials now try to attract visitors who stay longer and spend more money, instead of just increasing visitor counts. This approach helps local businesses and protects resources for the future.
More details on these trends are available at this tourism economic fact sheet.
Challenges Facing Hawaii’s Economy
Hawaii faces real challenges that make life on the islands expensive and uncertain for me and my neighbors. High housing costs, a heavy state tax burden, and workforce shortages affect many residents.
Housing Supply and Home Sales
When I look for a home in Hawaii, I see low supply and high prices. Average sale prices often stay above $800,000 for single-family homes.
Even modest condos cost much more than similar units on the mainland. This makes it hard for me to find affordable housing and discourages younger buyers.
Strict zoning laws, limited land, and long approval processes slow construction. Fewer new homes get built each year, so prices climb even more.
This also affects the rental market, where many people face high monthly payments.
A quick look at the numbers:
| Factor | Detail |
|---|---|
| Average Home Price | Over $800,000 |
| Annual Home Sales | Lower than pre-pandemic years |
| New Construction | Not meeting demand |
State Tax Burden and Cost of Living
Living in Hawaii means I pay more for almost everything compared to other states. Hawaii has one of the highest state tax burdens in the U.S., so more of my paycheck goes to taxes.
General excise tax applies to nearly all goods and services, raising prices on everyday needs. Food, utilities, and health care also cost more.
Shipping adds to consumer inflation, making groceries, gas, and even internet more expensive than the national average. The high cost of living, along with slow tourism recovery, puts extra pressure on families like mine and makes it hard to save or buy a home.
Hawaii’s economic outlook remains challenged by inflation and slow growth.
Outmigration and Workforce Shortages
In recent years, more young adults and working-age families have moved away from Hawaii. They leave because of high costs or because they can’t find good jobs.
This outmigration affects the whole community. Fewer people in the workforce creates shortages in health care, education, and trade services.
Employers struggle to fill positions, so some businesses reduce hours or close. The outflow of skilled workers also affects public services and local businesses.
Here are some impacts of outmigration:
- Gap in skilled labor
- Younger families leaving
- Lower school enrollment
- Harder to support an aging population
Emerging Industries and Diversification
Hawaii’s economy is moving beyond tourism and agriculture as new opportunities appear. I focus on sectors that can fuel good jobs and make Hawaii more resilient.
Technology and Innovation
Technology is becoming a bigger part of Hawaii’s future. Investments in software, digital media, and creative industries bring new energy to the job market.
Startups and tech companies like Hawaii’s unique culture and location, which help them reach both the U.S. and Asia. The state works to grow its technology base through partnerships with universities, research centers, and private companies.
Innovation sectors like cybersecurity, IT services, and biotechnology are growing. Government programs support training and tech business growth, aiming to reduce over-dependence on tourism.
Key Points:
- Software and digital media jobs are increasing
- Universities and local government offer support
- There is room for homegrown startups and research
Find more detail on Hawaii’s technology strategy from the Department of Business, Economic Development & Tourism.
Renewable Energy Growth
Hawaii is making a strong push for renewable energy. The islands have relied on imported oil for most electricity, but now there’s a clear move toward solar, wind, and geothermal power.
Hawaii aims to achieve 100% renewable energy by 2045. This shift creates jobs in installation, maintenance, and research.
Workers build and operate solar farms, wind turbines, and energy storage systems. New opportunities are opening up for businesses focused on clean energy technology.
Local policies encourage investment and focus on sustainability. These efforts help keep energy costs manageable for households.
Main Impacts:
- Reduces fossil fuel dependence
- More jobs in installation and maintenance
- Supports local business and environmental goals
See more details in the Chamber of Commerce Hawaii 2030 Blueprint.
Growth in Health Care and Professional Services
The demand for health care workers in Hawaii keeps growing. An aging population and the need for local services drive steady growth in this field.
Jobs for nurses, doctors, home health aides, and telehealth providers are expanding every year. Professional services like law, accounting, and consulting also help the economy diversify.
These roles help other businesses operate and grow. Training programs and higher education let residents enter these fields without leaving the islands.
Highlight Areas:
- Expanding need for health workers and remote care
- New training options for residents
- Professional services help other sectors grow
Learn more about emerging health care and service industries in Hawaii’s economic diversification report.
Agriculture and Food Security
Agriculture plays an important part in Hawaii’s economy and local food supply. Decisions about farming and food systems shape job growth and resilience.
Current Agricultural Landscape
Hawaii’s farms produce crops like coffee, macadamia nuts, tropical fruits, and vegetables. Much of the food sold in stores is imported, which makes prices higher and food supplies less secure during shipping delays or disasters.
Only about 10–15% of local food is grown in Hawaii. Limited farmland, high land prices, and labor costs create challenges for farmers.
Development pressures and competition for water and resources also affect the agriculture sector. Government reports show that Hawaii is working to boost local food production and reduce dependence on imports.
More small farms now focus on fruits, greens, and organic produce. These changes support more local jobs and make Hawaii less vulnerable to supply disruptions.
Several local efforts, such as the state’s food self-sufficiency strategy, aim to increase homegrown food.
Opportunities for Sustainable Farming
Hawaii has many opportunities to improve food security through sustainable farming. New technology and methods help farmers grow more with fewer resources.
Hydroponics and aquaponics are gaining ground in Hawaii. Organic farming, crop rotation, and careful water use protect soil health and the environment.
These methods help farms last longer and recover after storms or droughts. Supporting local agriculture infrastructure and education makes the food system stronger.
Programs that link local farmers to schools and restaurants, like “farm to table,” keep money in the community. Collaboration among farmers, businesses, and policymakers is essential.
For example, the Transforming Hawaiʻi’s Food System Together initiative brings partners together to improve food security and sustainability.
Real Estate and Construction Trends
Hawaii’s growth depends heavily on real estate and the construction industry. Property prices, new projects, and housing demand are all shifting as more people invest in the islands.
Real Estate Market Overview
Tourism, population shifts, and limited land shape Hawaii’s real estate market. Each factor pushes average sale prices higher, especially in popular neighborhoods.
Homes and condos are in high demand because vacant land is limited. Short-term rental properties are popular among investors, as tourism increases the number of visitors needing places to stay.
Increased investor activity has caused some price surges in areas close to attractions. This makes it harder for local families to compete.
You can read more about these trends in this Hawaii real estate overview.
Key Trends:
- High prices for homes near beaches
- Strong demand for short-term rentals
- Limited housing inventory
Impact of Construction Industry
The construction industry drives Hawaii’s economic growth by adding jobs and new developments. New residential and commercial projects now create many local jobs.
When more buildings go up, workers find more opportunities in construction and related fields like materials supply. Growth in construction is expected to continue into 2025, helped by new investments and ongoing repairs.
These projects help meet housing demand and support other sectors, such as retail and tourism. Recent projections show that construction is one of the main forces behind Hawaii’s economic recovery.
Impacts of Construction:
- Increased job opportunities
- More new housing units
- Boosts to local economies and small businesses
Labor Market and Workforce Development
Hawaii’s economy needs workers ready for new technology, diverse jobs, and a changing job market. By focusing on STEM education, hands-on training, and keeping young professionals in the islands, Hawaii can build a stronger future workforce.
STEM Education Initiatives
STEM education leads to future jobs in tech, healthcare, and engineering. Hawaii schools promote programs that teach coding, robotics, and digital skills starting in middle school.
These efforts better prepare students for jobs where computer skills are in demand. Workforce development groups work with local colleges to create summer camps, workshops, and after-school clubs focused on science and math.
Some schools offer dual credit so high schoolers can earn college credits early. Teachers also partner with local employers to give students real-world experience.
Many jobs in Hawaii now need skills in data analysis and problem-solving. Expanding STEM training is key to boosting long-term employment and meeting the state’s economic needs.
Apprenticeship Opportunities
Apprenticeships give students and job seekers real work experience. Hawaii is expanding apprenticeships in construction, healthcare, IT, and tourism.
These programs let workers “earn while they learn” and gain practical skills. Many local companies now offer structured apprenticeships that last one to three years and include classroom work plus paid, on-the-job training.
Some programs guarantee a job at the end. These opportunities help fill workforce gaps, especially in healthcare and trades.
Workforce development boards design apprenticeship programs that match Hawaii’s job market needs. Apprenticeships provide a direct path to skilled, high-wage careers and reduce reliance on importing skilled labor.
Strategies for Retaining Young Talent
Keeping young, skilled workers in Hawaii is a major concern. Many young people leave for the mainland because of higher wages, lower living costs, or more job choices.
Employers who offer career growth, training, and flexible work options are more likely to keep young workers in Hawaii. The state and local organizations support internships, mentoring, and job placement programs.
Efforts like the Hawaii State Workforce Development Unified Plan align job opportunities with economic growth and focus on affordability, housing, and education.
Building strong employer-employee relationships, improving benefits, and creating clear career paths help Hawaii keep its young talent. These steps support individuals and help the state’s economy grow and diversify.
Business Climate and Investment
Hawaii’s economic growth depends on creating a strong business environment, supporting local business groups, and helping professional services that guide both new and established companies.
Business Friendliness
Hawaii still faces many challenges for businesses. Companies deal with high taxes, strict regulations, and expensive real estate.
A 2024 state government report shows that new and current businesses struggle with these burdens while trying to stay competitive. Efforts are underway to identify and reduce regulatory and tax barriers to attract new investment.
Support for small businesses is growing through loans and investment funds, including Blue Startups and HI-Cap Funds. These programs help businesses access money to grow and adapt to changing markets.
Role of Chamber of Commerce Hawaii
The Chamber of Commerce Hawaii is active in shaping the state’s business future. In 2024, the group released its 2030 Blueprint, a plan to support small firms, startups, and entrepreneurs and create more jobs.
Community and business leaders helped build this plan. The Chamber works with the government to suggest new laws, cut barriers, and provide feedback on policies that affect economic growth.
By leading these efforts, the Chamber encourages collaboration between businesses and lawmakers. This helps keep the local economy strong.
Read more about the chamber’s work in their 2030 plan to grow jobs and support business.
Business and Professional Services
Business and professional services support many local firms. Companies in Hawaii rely on experts in law, accounting, marketing, and technology to improve operations and reach new customers.
Business accelerator programs like Quest Accelerator Hawaii provide training, mentoring, and investment connections. Cohort programs and tech funds also help firms bring new products and services to market.
Professional support helps small businesses grow, adapt, and meet state requirements. Many companies turn to these services to stay ahead in Hawaii’s unique economic landscape, especially as the state focuses on entrepreneurship and growth.
Migration and Demographic Shifts
Population and income changes shape how people live, work, and move in Hawaii. These shifts affect job markets and family incomes.
Population Trends
Hawaii’s population is growing more slowly than before. Fewer births and an aging population cause natural growth to slow down.
Experts predict this slow growth will continue. Hawaii’s growth rate will likely shrink over time.
Migration now plays a bigger role. Many young adults and families leave for lower costs and new opportunities, especially on the U.S. mainland.
Some working-age people and international arrivals move to Hawaii. This creates a mix of gains and losses.
My research shows that migration trends in Hawaii change the state’s age groups and population size. Out-migration by locals is now stronger than population growth from births.
Impact on Personal Income
Many working-age residents are leaving. This affects Hawaii’s job market and wages.
When younger adults move away, fewer workers are available in key fields. Local employers find it harder to hire skilled labor.
People who leave often seek better-paying jobs or a lower cost of living. This changes the state’s income profile.
New residents may bring outside money or invest in local businesses, which can help personal income grow. However, economic projections for Hawaii show that personal incomes may not keep up with rising living costs unless migration and wage growth improve.
Economic Projections and Future Outlook
Hawaii’s economy faces new challenges and opportunities in 2025. State and local leaders are working to support growth.
Forecasts and Scenarios
Economists predict Hawaii’s real GDP will rise by about 1.2% in 2025, based on recent projections from the Department of Business, Economic Development & Tourism (DBEDT). The national economy is also expected to grow slowly, about 1.2% in 2025 and 1.5% in 2026.
These numbers show modest growth during uncertain times.
Key factors affecting projections:
- Federal policies: New U.S. tariffs and changes to federal budgets in 2025 are raising concerns. Some experts think Hawaii could face a mild recession because of these changes.
- Consumer confidence: Inflation and job changes make people cautious about spending. This puts pressure on local businesses.
- Tourism trends: Visitor numbers remain steady, but do not reach past peaks.
You can find more details in the DBEDT economic outlook and the UHERO forecast.
Government and Private Sector Initiatives
State agencies like DBEDT create policies to stabilize Hawaii’s economy. They encourage innovation, support small businesses, and promote industries beyond tourism.
Some main steps include:
- Grants and loans: Programs help local companies invest and hire. Startups in technology and agriculture benefit from these programs.
- Workforce training: Schools and businesses partner to improve worker skills.
- Energy projects: The state supports clean energy and sustainable industries to lower costs and create jobs.
Private organizations also invest in new sectors such as tech, healthcare, and renewable energy. These investments aim to make Hawaii’s economy stronger and less dependent on tourism.
Find further information at the DBEDT Research & Economic Analysis and the UHERO economic research.
The Role of Culture in Economic Growth
Hawaii’s unique mix of traditions, languages, and customs shapes daily life. Culture also influences business and innovation.
Many projects in the state show how cultural pride and local knowledge boost economic opportunity.
Cultural Heritage as a Driver for Innovation
Hawaii’s diverse culture is more than just a source of pride. It creates new business ideas and partnerships.
Community groups and local leaders keep native Hawaiian values at the center of economic progress. They make sure business growth also respects traditions.
Many organizations bring together local entrepreneurs, artists, and scientists from different backgrounds. For example, some businesses blend Hawaiian art, language, and food with modern technology.
These businesses attract visitors and investors who want authentic, local experiences. Hawaii’s multicultural background draws both talent and investment to the islands.
This unique cultural capital creates new chances for jobs, tourism, and creative industries. It plays an important role in Hawaii’s economic development.
