Local business leaders listen to panelists speak about the state, national and local economies during Aspire Johnson County’s Economic Outlook Breakfast on Thursday at The Sycamore at Mallow Run in Bargersville. Noah Crenshaw | Daily Journal
Johnson County’s economic activity grew at about half the rate that the rest of the U.S. did, a sign of how national policies are trickling down and affecting local businesses.
Four economic experts were the featured speakers for Aspire Johnson County’s Economic Outlook Breakfast on Thursday at The Sycamore at Mallow Run in Bargersville. The four speakers are from the Kelley School of Business at Indiana University and came as part of the school’s statewide economic outlook tour, known as “Futurecast.”
For a little more than an hour, the four experts spoke about the national, state and local economies, along with the stock market. They also answered questions from the audience, including about tariffs.
“2025 has been mixed,” said Phil Powell, executive director of the Indiana Business Research Center and a clinical professor of business economics and public policy at Kelley. “Again, we’re not staring into the edge of economic abyss, right? We’re not forecasting recession, but this is a slow-growth economy — we are not living up to our potential.”
National, state outlooks
Andrew Butters, an associate professor of business economics and public policy at Kelly, said that 2026 will be a year that will be “kind of completing our digestion of what has been kind of a turbulent time in the U.S. economy over the last couple years” and that might create a possible divergence for the economy.
The consensus for 2026 is that the U.S. economy will have modest growth of between 1.5 to 1.8%, which Butters described as a “deliberate slowdown” that could bring demand and supply more into balance. Monetary policy has been “quite restrictive” across various sectors because of “strong inflationary pressures,” he said.
Butters said he is paying the most attention to is the labor market. There has been a “significant slowdown” in employment growth, and federal government has even had to back and revise past job numbers as its slowed. He expects the national unemployment rate to increase slightly, potentially peaking at 4.8% in 2026.
As for the state, Carol Rogers, director of the Indiana Business Research Center, expects tariffs to have some impact. She’s concerned because of the uncertainty surrounding them, mainly because of Indiana’s manufacturing-heavy economy, she said. The state’s biggest trading partners are Canada and Mexico, both of which have tariffs levied against them and against the U.S..
Last year, the state’s exports were “really strong” when it came to the life sciences industry. But experts are seeing weakening in the exports of transportation and auto parts industries, which are examples of “durables.” This is because of tariffs, Rogers said, adding that these manufacturers are also not hiring.
Rogers believes the state could have a “jobless recession” where there aren’t going to be jobs available. Employers wouldn’t necessarily lose productivity, but they could just stop hiring, she said.
Later, Powell responded to an audience question about tariffs. He said businesses can adjust to tariffs. But businesses don’t always know what the tariff is, as it can change as it is negotiated.
Johnson County
The outlook for Johnson County is “sobering,” Powell said.
There are a few things happening in the economy that are really impacting Johnson County. One is a national consumer “pull back” of discretionary spending because of inflation concerns, while another is a decrease in spending for hotels, restaurants and the hospitality industry, which has been noted in the Indianapolis metropolitan area, Powell said.
Another impact comes from uncertainty when it comes to trade, which is affecting businesses, he said. Powell was referring to tariffs.
“Indiana is one of the top 10 states in terms of exports, so this really impacts us, really impacts manufacturing and tied to manufacturing is logistics,” he said. “Well, guess what? When you look at the Johnson County economy, manufacturing and logistics are a fourth of the economy here, and so what’s happening at the national level hits squarely the Johnson County economy, and you can see this in the data.”
Gross Domestic Product, or GDP, data at the county level is behind by two years, so experts looked at the total wage earnings of workers in the county, looking at specific quarters, to use as a “proxy” of how Johnson County is doing relative to the state and nation. They looked at information between the first quarter of 2024 to the first quarter of 2025, Powell said.
The data, which was current as of the first quarter of this year, is not good, Powell said.
“Economic activity in Johnson County grew at half the rate that we saw in the nation, and it grew at a third of the rate that we’ve seen in the metropolitan area,” he said.
This is despite the Indianapolis metropolitan area “kicking some booty” as a whole, Powell said.
“In terms of the metropolitan area, we are a shining star in the Midwest, but unfortunately, Johnson County is measurably lagging that progress,” he said. “And why? It’s because Johnson County has just more logistics and manufacturing than other parts of the metropolitan area, and you’re getting hit harder.”
In terms of employment, growth was flat in Johnson County during the same period. The Indianapolis metro as a whole grew 1.2% and the nation grew 1%, Powell said.
“So Johnson County, for the past year, probably 18 months, has lagged the country and has lagged the state,” he said. “And again, it’s because of the industry makeup that drives the Johnson County economy.”
Industry-specifics
Delving into the data by industry shows other insights, Powell said.
The county is seeing some growth in chemical, pharmaceutical and machinery manufacturing. There’s also been some growth due to reshoring, but there’s still uncertainty caused by tariffs, he said.
“If you want to avoid tariffs, what do you do? You produce stuff here,” Powell said. “So there are some segments of manufacturing that we’re actually seeing growth in and Johnson County can benefit from. But there’s others that do a lot of exports, [so] we’re gonna see a lot of retrenchment.”
Powell encouraged local leaders, development planners and businesses to think about what businesses have a growth opportunity because of tariffs and which don’t.
The transportation and warehousing sector is the biggest sector of the county’s economy. It shrank 6% in the last year, which Powell described as the worst news, as the sector is generally growing by between 1 to 1.5%.
The reason for the shrinking? Consumers and businesses are pulling back spending, he said.
Another large sector of the county’s economy is healthcare and social services, which has grown by about 4%. Digging deeper, there’s been a “huge growth” in employment for ambulatory care centers and nursing facilities, but a 4% loss in terms of hospital employment — which isn’t good, Powell said.
Of the top five industries that represent two-thirds of employment in the county, only one has grown — health care, but not specifically hospitals, he said.
Some bright sides
The outlook for Johnson County is not all gloom.
For example, Powell doesn’t expect to see much change going into 2026 in terms of unemployment. Johnson County’s rate is 3.3%, compared to a state rate of 3.6% and a national rate of 4.3%, Powell said.
“So if you’re in Johnson County and you want a job, you’re going to find one,” he said.
The construction sector grew 3%, becoming the county’s sixth biggest employment sector, Powell said.
Additionally, the county has great leadership and communities that work together, Powell said. The county “sets the model” for how different jurisdictions and stakeholders can work together.
“I think there’s a lot of great stuff in Johnson County that will help you get through this tough time,” he said. “There are a lot of things going on that have a lot of momentum, and a lot of that’s business growth.”
While the county saw “significantly” slower growth than the rest of the U.S., Powell noted that the county did see growth in new businesses — between 3 to 4%. The state’s rate shrank and that national rate barely grew, Powell said.
The population has also grown, and the county continues to grow faster than the rest of the metro area. The mixed economic environment has kept real estate stable, and the median sales price has fallen 4% from last year — a sign of a cooling market, he said.
Moving forward
Powell’s message to Johnson County is that there is a need to work more on trying to have people live and work in Johnson County. A lot of the county’s labor force comes into the county to work, while a lot of residents leave the county to go to work, he said.
“I think that’s difficult. You feel that vulnerability here, given your industry structure,” Powell said.
To effectuate this shift, Powell recommended officials focus on recruiting more small- and medium-sized businesses that are growing fast. This will accomplish it faster than bringing in “big industrial giants,” he said.
It will also allow officials to focus more on entrepreneurship, place-making and “Main Street” businesses, he said.
But ultimately, Powell doesn’t see much changing for Johnson County in 2026 until “the fog lifts on tariffs” and households become more relaxed when it comes to spending. Until then, the county will be “growing below its potential.”
“It’s not catastrophic. It’s not shrinking, but it’s just not going to feel as good as it has the last few years,” Powell said. “But if you set a strategy, make bold investments and have great leadership and good marketing as communities [that are] going to see forward; there’s still a lot of great things going on that are going to give you long-term momentum that when this sort of pause does end.”
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