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    • Indiana’s 2025 growth forecast highlights population decline
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    Indiana’s 2025 growth forecast highlights population decline

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    Indiana’s workforce will reach a record 3.4 million people by the end of next year, Indiana University researchers project, but the state still faces challenges in increasing the number of college-educated workers.

    The Indiana Business Research Centerled by Indiana University’s Kelley School of Business, reported Wednesday its annual forecasts about the state economy for 2025.

    Employment rates and incomes in Indiana are expected to grow modestly in 2025, at rates below the United States average. While Indiana’s unemployment rate will rise slightly next year from the current rate of about 4.3 percent, researchers say, the rate is expected to remain below 5 percent.

    Nationally, researchers forecast that core inflation, which best tracks the long-term trend in price levels, will continue to decline to nearly 2.3 percent in 2025. That measure hit a three-year low of 3, 2% in September.

    Here are three key takeaways from the data for central Indiana:

    The Indy metro area is leading the growth

    Like this year, the 11-county Indianapolis metro area is projected to exceed the state’s percentage growth in real domestic product — the value of goods and services produced in Indiana — in 2025.

    The state’s real GDP growth in 2024 will end the year around 2.1% and rise to 2.9% in 2025, which is closely aligned with national averages. In the Indy metro area, growth is expected to reach 2.3 percent this year and increase to 3.1 percent in 2025.

    Phil Powell, Chief Executive of the IBRC, said: a lower interest rates this year triggered more consumer spending on durable goods such as vehicles, appliances and furniture. Indianapolis’ manufacturing-intensive economy is benefiting from that unexpectedly strong spending after years of high inflation, Powell said.

    But not only hard goods had an impact. 2024 was a record year for conventions and major events in downtown Indianapolis, Powell said.

    IBRC data shows the city will end the year hosting more than 550 “signature events” that have generated hundreds of millions in local spending. For example, the three Taylor Swift concerts this weekend will bring about $100 million to the local economy, IBRC estimates.

    More: Still looking for tickets to the Taylor Swift Eras Tour in Indy? Tips to avoid being scammed

    Lower-wage jobs are increasing as the number of scientists and engineers decreases

    While economic output in Indianapolis has grown overall, Powell pointed to troubling long-term trends in the type of jobs employers are adding and losing in the area.

    An analysis of jobs data from 2019 to 2023 showed the Indy area has 12 percent fewer scientists and 7 percent fewer engineers than it did before the pandemic, according to Powell.

    During the same time frame, the area reported a 17 percent increase in the number of transportation and logistics workers. While praising the city’s “Crossroads of America” ​​status, Powell noted that those jobs tend to pay less.

    Overall, Powell said, Indiana has struggled to grow its number of college-educated households, which earn on average twice as much as households where no one has a degree.

    To play an important role in the country’s future economic growth, Powell said, state and city leaders must become “obsessed” with attracting engineers and scientists to large metropolitan areas.

    “The competition is fierce and we’re not competing,” Powell said. “We were kind of lacking as a region.”

    The split between IU Indianapolis and Purdue University in Indianapolis this summer has already led to major capital investments by both universities. Local government and business leaders say they look to Boston as a model for how major research universities can spark dense residential and commercial growth.

    “When you bring smart people together,” Powell said, “it attracts more smart people.”

    More: Indiana Ave. fell as IUPUI grew. After Purdue and IU split, can they help renew the Avenue?

    The state’s slow population growth spells trouble

    While the 11-county Indianapolis metropolitan area is projected to add 405,000 residents by 2050, a 19.3 percent increase, most Indiana counties are likely to lose residents over the next three decades, the researchers discovered.

    IBRC projects that the state will add 383,000 residents by 2060, pushing its population by 5.6 percent to 7.17 million. About 60 percent of Indiana’s modest population growth will occur by 2030, according to the IBRC. National projections show that United States up about 10% from now until 2080.

    But by 2060, 67 of Indiana’s 92 counties are projected to lose people.

    By the 2040s, deaths will outnumber births in Indiana as baby boomers age and the fertility rate remains low, according to the IBRC. In 2023, there were 12% fewer births in Indiana than in 2007.

    These trends point to immigration as Indiana’s only source of growth. Kyle Anderson, an IU assistant professor of business economics, said that instead of US states competing with each other for young, highly skilled workers, the country should improve the processes by which foreigners can move here.

    “Smart, educated people from all over the world would like to come (to the U.S.),” Anderson said, “and we’re making it damn hard for them to do so.”

    Email IndyStar housing, growth and development reporter Jordan Smith at [email protected]. Follow X: @jordantsmith09

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