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Hawaii News Now: State of Hawaii’s Economy: Recession fears fade, but wage growth needed

February 5, 2026

By Annalisa Burgos

HONOLULU (HawaiiNewsNow) – No recession for 2026. That was the good news shared at the Chamber of Commerce of Hawaii’s annual State of the Economy breakfast Thursday morning.

Government and business leaders gathered at the downtown YMCA to take stock of Hawaii’s economy and what officials are doing to bounce back from last year’s dismal tourism numbers, federal cuts, job losses, and tariff impacts.

“It looks like we may have turned the corner,” said UHERO executive director Carl Bonham. “Still weak recovery or still weak growth, but not a continuing recession.”

Gov. Josh Green said the state expects 1.5% GDP growth this year and continued low unemployment, currently at 2.2%.

While UH economists had forecast a mild recession last December, they say the 4th-quarter data is coming in stronger than expected, prompting a bit more optimism.

“It’s the uptick in visitor spending that we saw that really started before the holidays,” Bonham said. “Even with a big loss in federal civilian workers, we saw continued job gains, and so I don’t think it was just the holidays.”

Bonham also noted the record number of construction workers over the past 6 months, thanks to federal and military contracts.

Still, Hawaii is consistently ranked among the worst states to do business due to high land and labor costs, complex regulations, and a lack of innovation and access to capital. Experts say that unless we address those issues, local families will continue to leave.

And while Hawaii’s cost of living remains high, it’s not what’s forcing locals to move to the mainland.

“It’s always been expensive to live here. It’s really that our incomes just aren’t keeping up with the rest of the country,” Bonham said.

Business owners say they can’t offer competitive wages without more support, which is why the Hawaii Chamber of Commerce is backing at least 36 bills this legislative session.

“How to support small business through access to capital, maritime, 21st century that relates to workforce housing, and making it less challenging for local farmers to be able to produce the goods for Hawaii as well as export, talking about how can we integrate technology in travel and tourism so the experience is magnified,” said Sherry Menor, President and CEO of the Chamber of Commerce of Hawaii.

Some ideas: create a state-managed, employer-led Sector Partnerships Special Fund to bridge education and the workforce, and establish a Sandbox Program that brings together developers and regulators to build affordable housing without the red tape.

The Chamber says its economic action plan, known as the 2030 Blueprint, is on track, but engagement is key.

“They need to hear more voices from the broader community so that we collectively can shape the policies to move our state forward,” she said.

Click here for a list of bills aimed to support small businesses, and click here to read more about the Chamber’s legislative agenda.

See the full story here.