Rebecca Slotegraaf, associate dean for marketing in the Kelley School of Business, moderated the event at Ivy Tech Community College Bloomington Thursday.
(Aubrey Wright, WTIU)
Experts with Indiana University’s Kelley School of Business are predicting national and statewide economic growth while Bloomington will lag behind in 2025, though a new president could complicate estimates.
Futurecast panelists are touring 11 Indiana cities to share economic outlooks and expertise. They kicked off the tour in Indianapolis before the 2024 General Election and made a stop in Bloomington Thursday less than 48 hours after former President Trump was elected president.
The forecast uses econometric models developed by the Center for Econometric Model Research, IU said in a release, as well as expertise from Kelley School faculty.
Indiana and the U.S. should see a return to normal, while Bloomington compares worse for 2025.
2025 outlooks for the U.S. and Indiana
Nationally, panel experts said 2025 is generally looking up. Andrew Butters, a Kelley School assistant professor, said the outlook is a “welcome change” compared to the last five years. Real GDP is expected to grow while inflation slows. Unemployment will remain below 5 percent, though he said it could increase slightly.
Geopolitics could play a role in the future, Butters said, as could Trump’s trade policies.
Hoosier business could be hurt by Trump’s economic plans. Trump proposed significant tariffs on the campaign trail. As one of the most manufacturing-intense states in the U.S., Indiana products will become more expensive to make and less price competitive, Powell said.
“We're keeping a close eye on that,” said Phil Powell, executive director of the Indiana Business Research Center.
Russell Rhoades, a Kelley School clinical associate professor, said China’s housing market issues could negatively impact the U.S. China owns a significant portion of the U.S.’s debt, and leaders may choose to sell off American debt.
Indiana will probably perform better compared to the rest of the U.S.
“While we expect the national economy to grow about 2.1 percent next year, we expect the state to grow 2.9 percent,” Powell said. “Interest rates coming down help our manufacturing economy, so we can disproportionately benefit from that.”
Indiana’s unemployment rates will likely remain under 5 percent, Powell said.
Productivity is also an important factor, Powell said. For the first time in the state’s history, Indiana’s productivity grew faster than the U.S. from 2017-2023.
“That is a testament to the next level strategy that we saw from the governor's office and from the General Assembly,” Powell said. “They've been focused on that like a laser since Holcomb had come to office, and the data shows that our labor productivity grew 7.8 percent.”
Productivity must increase before workers are paid more, Powell said.
“You only get paid as much as you deliver at the workplace,” Powell said. “So, if our businesses and our employers are hiring skilled talent, putting technology in place that lifts productivity, our workers are going to make more money.”
Powell said as government funding from the Covid-19 pandemic runs out, Indiana leaders will likely spend less. IU and other public institutions could be impacted.
Bloomington lags behind
Powell said Bloomington shows a pattern of lagging, even before the pandemic. Despite attracting young people through IU and Ivy Tech Community college, the core working population aged 18 to 44 is shrinking.
“The labor force growth is just anemic,” Powell said. “Bloomington cannot become a vibrant economy without dynamic talent.”
The city’s population will decline, Powell said.
“So depopulation has started here — in the place in the city with the most vibrant university on the planet Earth,” Powell said.
The average worker in Monroe County earns $1,037 a week, Powell said. That’s below average for the U.S. and for Indiana — a state that already struggles with wages. Despite that fact, Powell said wages have grown about 5 percent in the county in the last year.
Bloomington’s productivity increases don't match the rest of the state, Powell said. While the state grew 7.8 percent, Bloomington grew 1.7 percent. And since 2018, he said Bloomington has only added 700 workers to the labor force.
There is some momentum, Powell said. Bloomington is building a new convention center, housing is becoming more affordable and there’s more funding for workforce projects. But city leaders and business should work to provide more opportunities to attract a professional workforce, Powell said.
“Bloomington is going to live and die by the talent that is here,” Powell said.
One crowd member pointed out embracing racial, ethnic and language diversity could lead to more population growth, but he said the city, the legislature and IU aren’t welcoming. This is deeply concerning to him, he said.
Butters agreed with him.
“As the oldest member of the panel, I would double down on the thoughts and concerns you’re raising here,” Butters said.
Aubrey is our higher education reporter and a Report For America corps member. Contact her at aubmwrig@iu.edu or follow her on X @aubreymwright.
