Economic projections for Indiana's metro areas in 2026
Concern over tariffs, the continued implementation of artificial intelligence, inflation and pullbacks in consumer spending will play a crucial role in the future of Indiana’s metro economies.
As the calendar flips to a new year, Hoosiers are interested to see how the economy will fare in 2026. Kicking off on Oct. 29 in Indianapolis, the Kelley School of Business’s Futurecast tour embarked on its annual trek across the state, visiting 11 cities throughout November to deliver economic forecasts for the state, nation, financial markets and key metropolitan areas. Futurecast featured a seasoned panel of experts and speakers that offered insights on the changing economic landscape in Indiana and beyond.
Several common themes emerged from both the Futurecast tour and its accompanying Outlook issue in the Indiana Business Review. These themes include concern over tariffs and how they will impact national trade policy, the continued implementation of artificial intelligence, inflation and weakening consumer confidence (or pullbacks in consumer spending).
Below are some highlights from our panel of economists and professors outlining what to expect in Indiana’s local economies in 2026. For their full analyses, check out the Outlook issue of the Indiana Business Review.
Bloomington
Dr. Phil Powell, Indiana University
Bloomington unemployment fell from 3.9% to 3.4% between August 2024 and August 2025. Private business growth helped Bloomington sustain unemployment below the state and national rates and counteract reduced federal and state support for Indiana University. Private business establishments in Monroe County grew 4.6% from 3,318 in 2024 Q1 to 3,471 in 2025 Q1, compared to 2.8% statewide and 2% nationwide.
Low wages and expensive housing are historical barriers to economic development in Bloomington. In August 2025, the average worker in the Bloomington metropolitan area earned 11.9% less than the average Hoosier for an hour of work. The average house in Bloomington listed at a price 18.1% higher than the average house in Indiana.
Economic difficulties encountered by the Bloomington region in 2025 will continue in 2026. Bloomington’s recent bump in commercial activity, though, will provide momentum that diversifies sources of economic expansion. Whereas the nation is expected to grow 1.8% and the state 1.0% in 2026, the Bloomington metropolitan area is expected to grow between zero and 0.5%. Trends suggest a rise in unemployment to 4.0% in Bloomington.
Read full Bloomington article »Columbus
Dr. Steven H. Mohler, Indiana University Columbus
Frank Wadsworth, Indiana University Columbus
Columbus's unemployment rate has remained impressively low, stabilizing around 3.6% in mid-2025 after sharp post-pandemic declines. However, the Indiana Business Research Center projects a modest increase to 3.9% unemployment for 2026 — a shift driven by broader economic rebalancing rather than local weakness.
Columbus may experience approximately flat real GDP change (-1.0% to +1.0%) for 2025, similar to 2024. Weakness in the automotive and durable goods sector fueled by continuing high interest rates and combined with low consumer confidence may be key to this scenario. For 2026, Columbus real GDP is projected to increase between 0.0% and 2.0% based on moderation in consumer durable goods spending, increasing revenue for Cummins, reduced economic uncertainty and declining interest rates.
Fort Wayne
Rachel Blakeman, Purdue University Fort Wayne
Dr. Heather L.R. Tierney, Purdue University Fort Wayne
The annual average wage in Allen County shows a steady upward increase in current dollars, but when adjusting for inflation, wages peaked in 2021 at $61,737, declined in 2022 and 2023, then increased in 2024. The 2024 average annual wage lags behind the adjusted wage in 2020 and 2021. More simply, 2024’s wages have less buying power than wages in 2020 and 2021.
Allen County’s median rent price was stable between 2015 and 2019. In unadjusted dollars, the median jumped $90 between 2019 and 2021, then it jumped another $111 between 2021 and 2022. There was a slight dip in 2023, but the median crossed the $1,000 threshold in 2024.
Unemployment rate projections keep the Fort Wayne metro unemployment rate below 4%, barring any significant jolts to the economy. Unemployment is expected to peak in May 2026 at 3.9%, but it is projected to end 2026 at 3.8%.
Read full Fort Wayne article »Indianapolis
Dr. Phil Powell, Indiana University
Real GDP in Indianapolis grew 12.5% between 2019 and 2023 while it only grew 9.7% nationwide. Total wages paid to Indianapolis workers expanded 7.6% between 2024 Q1 and 2025 Q1 compared to 4.8% nationally. The Indianapolis labor force increased 7.8% between August 2019 and August 2025 compared to 4.3% nationwide. Between August 2024 and August 2025, national unemployment rose from 4.2% to 4.3% while it fell in Indianapolis from 4.0% to 3.3%.
The Indianapolis metropolitan area should enjoy between 1.5% and 2.0% real GDP growth next year. Unemployment is expected to slightly increase from 3.3% to just over 4.0%. While capital projects will fuel economic expansion, slowdowns in logistics and durable goods manufacturing – two important contributors to the Indianapolis economy – will keep the economy from growing at its full potential.
Read full Indianapolis article »Johnson County
Dr. Phil Powell, Indiana University
National economic retrenchment diminished economic momentum in Johnson County in 2025. Higher business uncertainty and a consumer spending pullback generated negative growth in tradeable industries that dominate the county. Employment in the county’s two largest tradeable industries– logistics and manufacturing – fell 5.3% and 1.1%, respectively, between 2024 Q1 and 2025 Q1.
The Johnson County unemployment rate fell from 3.4% in September 2024 to 3.1% in September 2025 despite near zero countywide employment growth and contraction of jobs in key tradeable industries. A proportionally large exit of residents from the Johnson County labor force, mostly through retirement, would explain this phenomenon.
The 2025 stall in Johnson County’s economic momentum will continue in 2026. The county’s reliance on logistics and manufacturing for income make it dependent upon a reversal of slow growth in the U.S. economy which is not expected to happen in 2026. Johnson County is expected to only grow between 0.5% and 1.0% next year. Trends suggest a rise in unemployment to between 3.5% and 4.0% in Johnson County.
Read full Johnson County article »Kokomo
Alan G. Krabbenhoft, Indiana University Kokomo
The Howard County unemployment rate shows a great degree of volatility, with a high-low spread of 1.8 percentage points during the first eight months of 2025. During the first couple months of 2025, the unemployment rate showed small-to-moderate drops in unemployment before experiencing a larger drop in March. However, since the declaration of “Liberation Day” in April (when the Trump administration rolled out its new tariff plan), the unemployment rate has mostly risen, especially for Howard County.
Assuming the moderation of trade restrictions, one can see a brighter future for agriculture within the region. Stability in agricultural production, as well as trade policies, will provide welcome comfort to farmers. However, the looming threat of ongoing or escalated trade tensions continues to keep many in the agricultural sector awake at night.
Read full Kokomo article »Lafayette
Dr. Timothy Zimmer, University of Indianapolis
The Lafayette Metropolitan Statistical Area (MSA) experienced several headwinds in 2025, but highlights emerged that suggest positive indicators heading into the new year. Job growth and unemployment in 2025 was positive but uneven across industries throughout the year.
The Lafayette MSA labor market has been uneven in 2025. Despite indicating some strength early in the year, it weakened after the midpoint as the labor force softened. Inflation, higher interest costs, rising labor costs and international trade policy hampered growth. Unemployment rates in 2025 are slightly below 2024 levels, but have been trending higher in the latter months of the year. The labor force in 2026 should remain stable and employment should grow, with further easing of interest rates and stabilizing trade policy.
The Lafayette MSA enters 2026 with a mixed economic outlook. The labor market has shown softness, particularly in the last few months. Wages, employment and job creation are lackluster. Stubborn inflation, high interest rates and trade policy concerns linger. Population growth remains steady and the area remains desirable. However, this could be negatively impacted by surging home prices and sluggish wage growth. The prospect of lower inflation, interest rates cuts and stable trade policy are certainly welcome and would likely foster a better economy as the year progresses.
Read full Lafayette article »Louisville
Dr. Uric Dufrene, Indiana University Southeast
Payrolls in the Louisville metro area are up roughly 5,500 jobs (as of August 2025) from the previous year and the unemployment rate remains at 4%. The outlook for 2026 calls for slower growth and fewer tailwinds from the consumer. A gradually weakening national labor market is expected to cool household spending, and that will eventually show up in Louisville’s overall performance. Payroll gains for 2026 will likely come in below 10,000 jobs, representing a modest pace of expansion compared with 2025. As the national economy loses momentum, Louisville’s unemployment rate is projected to edge upward, surpassing 4.5% and possibly approaching 5% before year-end.
The lingering uncertainty surrounding tariff policy and slowing consumer spending will provide notable headwinds. While a formal recession is not part of this year’s base forecast, the region is poised for a period of sub-trend growth marked by cautious hiring, slower demand and increased sensitivity to national economic developments.
Read full Louisville article »Muncie
Dr. Dagney Faulk, Ball State University
Crayton Morrison, Ball State University
The Muncie metro experienced employment and wage gains over the past year, although wage gains did not keep up with inflation for most industry sectors. Employment by industry, based on January-to-August averages, indicates that total nonfarm employment increased by 2.5%, reaching more than 49,200 jobs in 2025. First quarter wages averaged $1,004, up 0.8% from the same period in 2024. The county labor force grew and now surpasses pre-pandemic levels. Residential construction activity remains strong. The number of food stamp recipients is stable and is still higher than pre-pandemic levels.
The most recent forecast from the Indiana University Center for Econometric Model Research shows employment growth approaching 3% over the next year. Personal income is expected to increase less than 2% over the next year.
Read full Muncie article »Northwest Indiana
Anthony B. Sindone, Indiana University Northwest
Since 2020, GRP in the region grew from an estimated $36.4 billion to $50.1 billion in 2023 and an estimated $51 billion in 2024, averaging approximately 6.6% annual growth. In 2025, there is projected annual growth between 2% and 4% amid stable industrial production and expanding service markets.
Northwest Indiana’s industry mix contributed positively to growth due to logistics and health services, but regional competitiveness was uneven — strong in Jasper and Porter counties, weak in Newton and Starke counties (due to declining retail and manufacturing bases).
Looking ahead to 2026, we see that Northwest Indiana is in a strong position to continue its steady growth. The author forecasts an unemployment rate between 4.5% and 4.9%, growth in personal income of 2.5% and growth in GRP of 1.8%.
Read full Northwest Indiana article »
Richmond
Dr. Oi Lin Cheung, Indiana University East
As of the first quarter of 2025, manufacturing remains the Richmond region’s leading employment sector, providing 13,582 jobs. The region's average monthly labor force for January to August increased by 0.63% from the previous year, totaling 100,328 people in 2025. Over the same eight-month period in 2025, the region's overall average monthly unemployment rate was 3.89%, a decline of 0.35 percentage points from the previous year.
The region’s average monthly unemployment rate for 2026 is forecasted to stabilize at an exceptionally low level in the mid-to-upper range of 3%, with variations across industries and counties, depending on the impacts of the U.S. government shutdown, tariffs and artificial intelligence on businesses’ operations.
Read full Richmond article »South Bend and Elkhart
Dr. Hong Zhuang, Indiana University South Bend
Despite headwinds from higher interest rates and elevated tariffs, the South Bend-Mishawaka and Elkhart-Goshen labor markets demonstrated notable resilience in 2025. The labor force expanded, employment growth outpaced the national average and the unemployment rate declined. At the same time, labor costs rose at a faster pace, reflecting tighter labor market conditions. The housing market in St. Joseph County remained active in 2025, with increases in new single-family home construction and closed sales of existing homes.
In the South Bend-Mishawaka metropolitan area, the ongoing construction of the General Motors-Samsung SDI battery facilities and the Amazon data center will continue to stimulate labor demand in 2026. The local unemployment rate is projected to range from 4.3% to 4.5%, with modest wage growth reflecting the higher national price level. Household income is expected to rise further as total work hours increase.
In the Elkhart-Goshen MSA, employment is expected to expand modestly, with unemployment hovering between 4.0% and 4.2%. Manufacturing accounts for about 46% of total nonfarm employment, with most positions tied to recreational vehicle (RV) production. Accordingly, a projected 3.9% increase in RV shipments to 350,000 units in 2026 should help sustain local manufacturing employment and stabilize broader labor market conditions. The wage rate is also expected to rise modestly, supporting a corresponding increase in household income.
Read full South Bend-Mishawaka and Elkhart-Goshen article »Learn more
Visit www.ibrc.indiana.edu/ibr to read detailed metro analyses, as well as projections for the nation, state, financial markets, housing market and more.