Kelley School of Business releases 2025 economic forecast
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Experts at the Indiana University Kelley School of Business say positive economic growth will continue in the Hoosier state and across the country.
The Kelley School released Futurecast 2025, its annual economic forecast, on Wednesday.
“The economy is really quite strong right now. We’ve seen several years of positive and above average economic growth, which is a little surprising when we had inflation and higher interest rates,” Kyle Anderson, IU Kelley School of Business economist, told Inside INdiana Business. “We sort of expected there to be an economic slowdown. But the reality is, our economy is quite good right now.”
Anderson says there’s momentum building across the state, and Indiana is seeing low unemployment. The Futurecast also says supply and demand will come back into balance after the shortages and disruptions that occurred during the COVID-19 pandemic.
“We’re seeing an economy that is truly post COVID,” Anderson said. “That’s reflected in more stable growth, a more normal unemployment rate [and] a little bit higher interest rates, but generally a well-functioning economy.”
Data shows that while central Indiana is still the economic driver, the manufacturing industry is strong in regions across the state. However, researchers are seeing a divide between Indiana’s urban and rural areas.
“I think that growth is spread out statewide, because you’ve got areas like Fort Wayne, Evansville, the Northwest region, all of these areas are doing pretty well…[but] some of our smaller communities are struggling,” Anderson said. “They’re struggling to retain workers and retain talent and have population growth … it’s not unique to Indiana; it’s true across the country.”
Last month, the Indiana Economic Development Corp. said that it has secured $38.3 billion in committed capital investment from 124 companies through the third quarter of this year. That beats the previous record of $28.7 billion for all of 2023.
The state is also seeing strong wage growth over the last year and a half, according to the report. Futurecast 2025 also looks at inflation, which Anderson says is under control right now.
“It’s about 2.5% year over year. Prices have risen a little bit, but really that’s within the range,” he said. “The challenge with that is folks still feel that prices are higher and they are right…low inflation doesn’t mean that prices are coming down; it just means that prices are stable.”
The Kelley School has presented its forecasts around the state since 1972, based on research from its Indiana Business Research Center. This year, the Futurecast economic tour will visit 11 cities.