The Indiana economy doesn’t operate in a vacuum. The fall 2024 national and state elections will yield economic effects based on the social and economic policies of the newly seated administrations. While the media will likely focus on abstract gladiator fights at the national level, we can keep our sights on what works and what needs fixing within Indiana’s economy.
To do that, we will focus first on the beating heart of all economies—consumption, which has been strong since the pandemic. After a year (or more) of pandemic-induced isolation, deprivation and scarcity (tempered by stimulus checks), the U.S. consumer keeps on buying—even with inflation-boosted prices.
What goes up must come down, at least a little bit. As inflation has eased, the rate of consumption began a slow descent which will continue through 2025, reaching a plateau in 2026 and 2027, based on the IU Kelley/IBRC forecast (see the trendline in Figure 1).
Why focus on consumption? It constitutes two-thirds of the national economy (as measured by gross domestic product) and Indiana’s economic fortunes depend on it. Look closely at Figure 1, where we see the two big components of consumption—goods and services. Goods are further broken out into durable goods (such as cars and fridges) and nondurable goods (such as food and clothes). You can quickly surmise that services consumption in the U.S. was supercharged after the pandemic, with people consuming services (non-tangibles) at higher and faster rates than goods (tangibles).
Figure 1: Growth in U.S. consumption moves from great to good
Note: Change values for 2023 are actual data while values after 2023 are forecasts. These are seasonally adjusted annual growth rates.
Source: Indiana University Center for Econometric Model Research
The forecast for Indiana takes this into account. It also considers the Federal Reserve Bank continuing its interest rate cuts to temper job and wage growth and reduce inflation, taking the national economy from hot to room temperature.
These national measures are likely to result in a job-creation slowdown for Indiana, but at the same time, Indiana personal income growth should hold its own. Looking through 2025 and beyond, both employment and income show acceptable growth, although both will remain slightly below the national rate.
Employment
Indiana has seen strong growth in the number of jobs since the pandemic, not only recouping what was lost in 2020, but surpassing pre-pandemic levels.
The Great Recession took a large toll on Indiana’s job creation (see Figure 2). By 2015, Indiana reached the 3 million jobs mark, a level not seen since 2000. It was relatively slow growth, but it was steady—until the pandemic closures struck.
Figure 2: Reaching 3 million Hoosier jobs
Note: Red lines indicate years with more than 3 million jobs in Indiana. Data are not seasonally adjusted.
Source: U.S. Bureau of Labor Statistics, Current Employment Statistics
Fast forward to fall 2024 and Indiana is a steady member of the 3 million-plus jobs group of states (see Table 1).
Table 1: States in the 3 million-plus jobs club, October 2024
| States |
Jobs |
Rank |
| Colorado |
3,027,100 |
21 |
| Minnesota |
3,060,100 |
20 |
| Wisconsin |
3,063,400 |
19 |
| Missouri |
3,091,100 |
18 |
| Arizona |
3,298,600 |
17 |
| Indiana |
3,329,600 |
16 |
| Tennessee |
3,357,500 |
15 |
| Washington |
3,643,100 |
14 |
| Massachusetts |
3,772,700 |
13 |
| Virginia |
4,269,900 |
12 |
| New Jersey |
4,405,200 |
11 |
| Michigan |
4,533,000 |
10 |
| Georgia |
5,001,600 |
9 |
| North Carolina |
5,050,000 |
8 |
| Ohio |
5,724,400 |
7 |
| Illinois |
6,205,100 |
6 |
| Pennsylvania |
6,246,800 |
5 |
| New York |
9,934,600 |
4 |
| Florida |
9,971,800 |
3 |
| Texas |
14,354,300 |
2 |
| California |
18,202,100 |
1 |
Note: October 2024 employment numbers are not seasonally adjusted and preliminary.
Source: U.S. Bureau of Labor Statistics, Current Employment Statistics
From 2013 to 2019, Indiana employment increased at an annual rate of 1.17%. The IBRC’s Center for Econometric Model Research forecast has Indiana job creation close to matching that level over the next 15 months, but then falling short over the second half of the forecast period, to less than 1% (see Figure 3).
While Indiana employment growth is slow but steady, it doesn’t tend to keep up with the national average. For the 12 quarters of our forecast period, we expect Indiana job creation to average just under 1% per quarter, while we forecast U.S. job growth of 1.03%.
Figure 3: Change in total employment
Source: Indiana University Center for Econometric Model Research
The unemployment rate in Indiana has been lower than the U.S. rate since 2014 and significantly lower during the early post-pandemic period (see Figure 4). Over our full forecast period, the unemployment rate gap between Indiana and the nation will average 0.4%, about equal to its pre-pandemic level.
Figure 4: Unemployment rate
Source: Indiana University Center for Econometric Model Research
When we look at Indiana industry sectors, three things stand out in Figure 5. First, the post-pandemic restart process is now close to complete. Second, job creation during the next three years (2024-2026) shifts to the services sector and away from manufacturing. And third, construction growth was strong before, during and after the pandemic. Our model shows that total employment will continue to grow in Indiana, but will begin to slow next year and into 2026.
Figure 5: Indiana sector employment change (annual rate)
Source: Indiana University Center for Econometric Model Research
Personal income
Personal income growth in Indiana is forecast at 4% for most of the forecast period. We compare our current and previous forecast in Figure 6 to show some of the volatility in 2024.
Figure 6: Indiana personal income growth: Forecasts compared
Source: Indiana University Center for Econometric Model Research
Between 2013 and 2019, the gap between U.S. and Indiana personal income growth was 0.5%. This pattern reversed during both the shutdown and restart periods of the pandemic (see Figure 7). In our forecast, that pre-pandemic pattern reasserts itself. Over the full forecast period, Indiana’s income growth deficit relative to the nation again averages 0.5%.
Figure 7: Indiana and U.S. personal income growth
Source: Indiana University Center for Econometric Model Research
The outlook
Our current outlook for Indiana is fair-to-middling, as we forecast a slowdown in overall employment growth similar to pre-2020 levels (see Table 2).
At the same time, Indiana personal income growth will slow during the middle half of our forecast and then stabilize. And yes, the employment and income growth forecast for Indiana falls short of what we expect nationally.
But this isn’t a surprise. As a midsize state in the Midwest, Indiana generally comes up shy of nationwide indicators. But that’s where we need to dig deeper into our economy to tease out the opportunities and seek understanding (and potential mitigation) for our deficits.