{"id":230095,"date":"2026-02-27T03:50:19","date_gmt":"2026-02-27T13:50:19","guid":{"rendered":"https:\/\/www.hawaii.edu\/news\/?p=230095"},"modified":"2026-02-27T15:14:30","modified_gmt":"2026-02-28T01:14:30","slug":"uhero-first-quarter-forecast-2026","status":"publish","type":"post","link":"https:\/\/www.hawaii.edu\/news\/2026\/02\/27\/uhero-first-quarter-forecast-2026\/","title":{"rendered":"<abbr>UHERO<\/abbr>: Â鶹´«Ã½ moves beyond recession, growth to remain modest"},"content":{"rendered":"<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading time: <\/span> <span class=\"rt-time\"> 2<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span><figure id=\"attachment_230096\" aria-describedby=\"caption-attachment-230096\" style=\"width: 676px\" class=\"wp-caption alignleft\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.hawaii.edu\/news\/wp-content\/uploads\/2026\/02\/manoa-uhero-quarter-1-forecast-2026.jpg\" alt=\"people on a beach\" width=\"676\" height=\"381\" class=\"size-full wp-image-230096\" srcset=\"https:\/\/www.hawaii.edu\/news\/wp-content\/uploads\/2026\/02\/manoa-uhero-quarter-1-forecast-2026.jpg 676w, https:\/\/www.hawaii.edu\/news\/wp-content\/uploads\/2026\/02\/manoa-uhero-quarter-1-forecast-2026-300x169.jpg 300w, https:\/\/www.hawaii.edu\/news\/wp-content\/uploads\/2026\/02\/manoa-uhero-quarter-1-forecast-2026-130x73.jpg 130w\" sizes=\"auto, (max-width: 676px) 100vw, 676px\" \/><figcaption id=\"caption-attachment-230096\" class=\"wp-caption-text\">Tourism has stabilized but is not yet expanding, according to <abbr>UHERO<\/abbr>&#8216;s first quarter forecast for 2026. (Photo credit: Sung Shin\/Unsplash)<\/figcaption><\/figure>\n<p><span lang=\"haw\">Â鶹´«Ã½<\/span>\u2019s economy is moving beyond last year\u2019s mild recession, but the recovery will be gradual, according to the <a href=\"https:\/\/uhero.hawaii.edu\/\">University of <span lang=\"haw\">Â鶹´«Ã½<\/span> Economic Research Organization<\/a>\u2019s (<abbr>UHERO<\/abbr>) first quarter forecast for 2026 released on February 27. After job losses tied to a tourism downturn and federal job cuts, payrolls have begun to edge upward.<\/p>\n<p>A resilient U.S. economy and continued strength in construction are providing support, even as international visitor markets languish. Tepid job and income growth will become the new normal, because of anemic population trends and structural underperformance (relatively low long-run growth trend).<\/p>\n<p>Major takeaways of the February 27 report:<\/p>\n<ul>\n<li>The U.S. economy has held up better than expected, with solid consumer spending, investments in artificial intelligence and improving productivity. Economic gains slowed in the fourth quarter of 2025, partly because of the federal government shutdown. <abbr>UHERO<\/abbr> expects growth to remain near 2&#37; this year before slowing somewhat in 2027. It is too soon to know the effects of the recent Supreme Court decision invalidating the administration\u2019s broad tariffs. Globally, conditions have improved modestly, but continued trade tensions and policy uncertainty present ongoing risks.<\/li>\n<li>Tourism has stabilized but is not yet expanding. In 2025, the average daily visitor census dropped 1.3&#37;. The Japanese recovery has resumed at a moderate pace, but arrivals from other international markets have fallen sharply, reflecting adverse reaction to U.S. federal policy. Domestic visitors have helped offset these losses, and spending rose last year even as visitor numbers declined. Arrivals will stabilize this year, but a more substantial recovery in visitor headcounts is not expected until 2027.<\/li>\n<li>The local labor market has improved modestly after contracting in the first half of 2025. <abbr>UHERO<\/abbr> now expects a small net increase in payroll jobs this year. Construction, health care and the accommodations and food service sectors will continue to add jobs, while federal civilian employment losses will pull down growth numbers. The unemployment rate will remain near its current low 2.2&#37; level.<\/li>\n<li>Inflation in Honolulu is expected to peak just above 3&#37; in the second half of this year, although persistent U.S. inflation and the recent Supreme Court ruling on tariffs  introduce considerable uncertainty. Local inflation will then ease to a 2.5&#37; trend. Mortgage rates will remain near 6&#37;, weighing on housing affordability even as construction activity overall remains elevated.<\/li>\n<\/ul>\n<p>Overall, <abbr>UHERO<\/abbr> expects <span lang=\"haw\">Â鶹´«Ã½<\/span>\u2019s economy to expand at a modest rate over the next several years.<\/p>\n<p>&ldquo;Real income will grow by about 1&#37; annually,&rdquo; <abbr>UHERO<\/abbr> wrote. &ldquo;Real <abbr title=\"Gross Domestic Product\">GDP<\/abbr> will expand by 1.6&#37; this year before converging to a similarly slow long-run growth path. Forecast risks remain significant, including trade policy uncertainty, potential additional federal workforce reductions and ongoing weakness in international tourism. While the adoption of artificial intelligence holds promise, <span lang=\"haw\">Â鶹´«Ã½<\/span>\u2019s road ahead still looks to be one with slower growth than we have seen in the past.&rdquo;<\/p>\n<p><a href=\"https:\/\/uhero.hawaii.edu\/uhero-forecast-for-the-state-of-hawai%ca%bbi-hawaii-moves-beyond-recession-but-slowly\/\">Read the entire forecast on <abbr>UHERO<\/abbr>\u2019s website<\/a>.<\/p>\n<p><abbr>UHERO<\/abbr> is housed in <abbr title=\"University of Hawaii\">UH<\/abbr> <span lang=\"haw\">M&#257;noa<\/span>\u2019s <a href=\"https:\/\/socialsciences.manoa.hawaii.edu\/\">College of Social Sciences<\/a>.<\/p>\n<div class=\"responsive-video-wrap-post\"><figure class=\"wp-block-embed wp-block-embed-youtube is-type-video is-provider-youtube epyt-figure\"><div class=\"wp-block-embed__wrapper\"><div class=\"epyt-video-wrapper\"><iframe  id=\"_ytid_49131\"  width=\"676\" height=\"380\"  data-origwidth=\"676\" data-origheight=\"380\" src=\"https:\/\/www.youtube.com\/embed\/uNFkKCPCRdM?enablejsapi=1&origin=https:\/\/www.hawaii.edu&rel=0&autoplay=0&cc_load_policy=0&cc_lang_pref=&iv_load_policy=1&loop=0&fs=1&playsinline=0&autohide=2&theme=dark&color=red&controls=1&disablekb=0&\" class=\"__youtube_prefs__  no-lazyload\" title=\"UHERO Focus: 2026 Q1 Forecast\"  allow=\"fullscreen; accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen data-no-lazy=\"1\" data-skipgform_ajax_framebjll=\"\"><\/iframe><\/div><\/div><\/figure><\/div>\n<p>See the latest episode of <abbr>UHERO<\/abbr> Focus.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Overall, <abbr>UHERO<\/abbr> expects <span lang=\"haw\">Â鶹´«Ã½<\/span>\u2019s economy to expand at a modest rate over the next several years.<\/p>\n","protected":false},"author":16,"featured_media":230096,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[301,197,1467,1363,1600,158,1026,9,343],"class_list":["post-230095","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-research","tag-college-of-social-sciences","tag-economics","tag-manoa-excellence-in-research","tag-manoa-research","tag-public-impact-research","tag-publication","tag-social-science","tag-uh-manoa","tag-uhero","entry","has-media"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/www.hawaii.edu\/news\/wp-content\/uploads\/2026\/02\/manoa-uhero-quarter-1-forecast-2026.jpg","_links":{"self":[{"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/posts\/230095","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/comments?post=230095"}],"version-history":[{"count":4,"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/posts\/230095\/revisions"}],"predecessor-version":[{"id":230215,"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/posts\/230095\/revisions\/230215"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/media\/230096"}],"wp:attachment":[{"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/media?parent=230095"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/categories?post=230095"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.hawaii.edu\/news\/wp-json\/wp\/v2\/tags?post=230095"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}