The uncertainty of a new presidential administration and the widespread bird flu in the U.S. are two additional wrinkles that could increase inflation and hurt the local economy over the next few years.
The state continues to recover from the economic hits of both the pandemic and the 2023 Lahaina fire — and a boom in construction jobs is also providing a boost to the economy.
“Overall outlook, I think, for Hawaiʻi is pretty decent. Continued recovery of tourism, rebuilding on Maui, the construction industry. … Those are all positives,” said Carl Bonham, economist and executive director of the University of Hawaiʻi Economic Research Organization.
But he said President-elect Donald Trump’s proposed tariffs and tax and immigration policies could hurt because they may lead to inflated prices and slowed economic growth in the U.S.
There could be some immediate economic growth if Trump implements a corporate tax cut that he’s also proposed.
But in 2026 and 2027, Bonham said, “ Our forecast brings us real GDP (gross domestic product) growth down to as low as 1% real GDP growth, and that's the effects of tariffs and immigration policy primarily. We’re not talking about recession territory or anything like that, but weaker growth than what we would have had otherwise.”
He also said the bird flu could make things worse, as it’s affected more than 130 million farmed birds in the country and has already led to rising prices on poultry and eggs.
“Over the last year, poultry and egg prices were up over 40%. And those are bird flu effects, right. Those are the results of culling herds, eliminating your poultry farms. There are some risks to the inflation front, which sort of pile onto the other policies,” he said.
Hawaiʻi’s aging population and its shrinking, tax-paying workforce also pose a problem for the economy.
Eugene Tian, the chief state economist, said there are still more births than deaths in the state, but “ in the next few years, the trend will reverse. We'll have more deaths than births. So the population growth in the future will be mainly coming from migration.”
Bonham said more well-paying jobs, affordable homes and better education will encourage people to stay and help the economy grow.
