Hawaii’s economy continues to head toward a mild recession in 2026, driven primarily by the overall U.S. economy, President Donald Trump’s ongoing tariffs, cuts in federal spending and deportations, according to the fourth quarter economic forecast released today by the University of Hawai‘i Economic Research Organization.

Combined with Hawaii’s sluggish tourism industry and expected slowdown in job hiring, “all of those come together to produce an overall weak economy,” said Carl Bonham, UHERO’s executive director.

UHERO’s economic expectations mirror its previous forecasts for 2025 even before the record-long, 43-day federal government shutdown began on Oct. 1, disrupting pay for many of Hawaii’s approximately 34,000 federal workers.

The shutdown reduced household spending in Hawaii a

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