Although Guam is not experiencing a recession, the island is facing inflation and wage pressures as employers compete for workers, according to Melanie Mendiola, vice president and director of investor education and guidance at BG Investment Services.
Mendiola, the former administrator of the Guam Economic Development Authority, was one of the speakers at Thursday’s 2026 Economic Forum presented by the Bank of Guam and ASC Trust.
Mendiola said a recession involves multiple periods of negative growth, deflation or other negative activity.
“That's not what we're experiencing," she said. "We're not experiencing a recession. What we're experiencing is a spike in inflation, and now that spike is starting to kind of taper off and be a little more calm.”
On Guam, she said, inflation tends to linger longer than it does in the mainland U.S.
Mendiola said the top cost drivers are housing (38%), food (23.4%), transportation (13%) and medical care (6%), which together account for about 80% of expenses.
High oil prices are one of the main factors behind inflation on Guam. Mendiola described what she called “second-round effects” of high oil prices, separate from the direct effects on fuel and utilities.
The “second round” involves fuel costs being embedded into the price of food and “anything that's relying on oil, which is basically everything.”
She said when relief arrives, it comes years after oil prices have dropped.
“If you compound second-round effects and the general kind of lag of inflation, you have two challenges that together, come together kind of uniquely for us, and make our environment all the more fragile,” she said.
‘People feel really bad’
Paul Ma, vice president at Fidelity Investments, addressed the forum virtually from St. Louis. He spoke about the “feel bad, strong economy” in the mainland U.S.
Ma said the country’s gross domestic product is especially high this quarter, and consumer spending – which makes up about 70% of the GDP – is increasing.
“Yet people feel really bad in this economy,” Ma said.
Ma said wage growth has actually outpaced inflation as reflected by the Consumer Price Index in the mainland U.S.
However, wages have not kept up with an alternative inflation measure, the “Common Man CPI,” which only looks at necessary expenses like food, gas and housing.
Ma also said that globally, the economic situation in Europe and Japan is improving, although Japan’s stimulus package is not good for the value of the yen.
Labor on Guam
Mendiola said that on Guam, the shortage of labor and pressure to pay higher wages have been problematic for employers.
The new $100,000 H-1B application fee will affect specialty occupations, particularly in health care. With about 250,000 registered nurse jobs unfilled in the United States, competition for qualified applicants is intense.
“What that means is these graduated RNs from the University of Guam and GCC can spend a year here at home and then probably go off-island and make four to six times as much,” Mendiola said.
Audience members asked about the future of the yen and what members of the community can do to help the tourism industry recover.
Mendiola said there’s nothing people on Guam can do to affect the yen or change the economic situation in other places. But she was clear about one thing that could be done to help Guam’s economy now.
“Lower the cost of power. That's my one-line answer. Everybody needs to come together. Get yourself a little task force,” she said. “Governor, we need a task force.”
Mendiola said lowering power costs would also lower the costs of other goods and services.
“More money flowing into our economy is what helps our economy,” she said.
