Sinking Optimism Among Hawai‘i Business Leaders

Local business leaders are worried about Hawai‘i’s economy.

In the latest BOSS Survey, 57% of business owners and executives surveyed felt the state’s economy would get worse in the coming year. That level of pessimism has only been recorded three times before by the BOSS Survey: twice during the Great Recession and once at the start of the COVID pandemic.

This is the first time ever that optimism about the local economy’s near future was so weak while the economy itself was not in a recession. In fact, the BOSS Performance Index and other measures of Hawai‘i’s current economy show relatively good numbers.

The latest forecast from the UH Economic Research Organization reflects similar pessimism about the near future. “Hawai‘i’s economic outlook has taken a decisive turn for the worse, as expansive federal policy shifts look poised to tip the local economy into a mild recession,” said the UHERO forecast issued on May 9.

“Sharp increases in U.S. import tariffs, sweeping federal layoffs, and volatile fiscal and immigration policies are undermining consumer confidence, raising inflation expectations and worsening the business outlook – both nationally and in Hawai‘i’s visitor-dependent economy.”

Boss performance index

The BOSS Performance Index, however, still shows a relatively strong economy. That index measures changes in employment, gross revenue and profit before taxes in the past year among the 341 businesses surveyed – did those three measures go up, down or stay the same at each of the companies?

Survey of Business Leaders: 3 More Reasons for Concern

Concern #1: Weak Spending Plans

The 341 respondents to the BOSS Survey were asked: Which of these three statements best describes your firm’s spending plans for the coming year?

• The percentage of businesses that plan to substantially increase spending matches the lowest percentage since 2020, the worst year of the pandemic.

• The percentage that plans substantial cost cutting is the highest since 2020 – and at least 5 percentage points higher than every year in between.

• A silver lining: Companies in the construction industry tend to be more bullish – 23% plan substantial increases in spending.

Concern #2: Many Fear their Businesses Won’t Survive

Respondents were asked: How confident are you that your company will still be in business three years from now?

• “Somewhat worried” and “Very worried” together totaled 26%. That’s the worst total — by at least 4 percentage points — for those two categories since 2020.

• A silver lining: Again, it’s construction. A related question asked respondents about the short-term prospects for their companies. The most optimistic response was “Will continue to flourish.” Among all businesses, 19% chose that forecast, but among construction companies, 30% did.

Federal spending has long been a bigger part of Hawai‘i’s economy than in most states. When we launched this latest BOSS Survey in April, the federal Department of Government Efficiency, then led by Elon Musk, was announcing major cuts in federal spending. Here are two questions we asked:

Concern #3A: Has your company been affected by actions taken by President Donald Trump’s administration and the Department of Government Efficiency (DOGE)?

Concern #3B: Have those actions in Washington, D.C., influenced your decision-making or your planning?

More than half of businesses, 52%, said they were affected in some way by the Trump administration and DOGE’s actions. But a significantly larger percentage, 68%, said those actions had at least some influence on their decision-making and planning.