Columbus forecast 2025
Assistant Professor of Management, Indiana University Division of Business, Columbus
A good analogy for the manufacturing-dominated Columbus economy is a roller coaster. So far in this millennium, gross domestic product (GDP) has increased 14 times and decreased seven times.
During this period, the GDP for the Columbus metropolitan statistical area (MSA) grew at a compound annual growth rate (CAGR) of 2.8%, which is slightly above the national CAGR of 2.4%. However, the actual annual rates of change for Columbus GDP varied from -18.3% in 2009 to 21.8% in 2010 (see blue dotted line in Figure 1).
Figure 1: Year-over-year change in real GDP for Columbus MSA and the U.S.
Source: CAGDP9 real GDP by county and metropolitan area and SAGDP9N real GDP by state, U.S. Bureau of Economic Analysis
A similar pattern is evident in the Columbus unemployment rate (see Figure 2). Peaks of unemployment corresponding with the Great Recession and the pandemic are clearly evident. The Great Recession was followed by a slowly improving unemployment rate, while the pandemic was followed by rapid improvement in the unemployment rate. The slow recovery following the Great Recession depicts the lengthy impact this event had on our economy and manufacturing.
Figure 2: Unemployment rate for the Columbus MSA
Note: Data are not seasonally adjusted.
Source: Local Area Unemployment Statistics (LAUS), U.S. Bureau of Labor Statistics
Columbus concluded 2023 with higher unemployment than 2022. During 2024, the unemployment rate was 3.4% or higher for all but one of the first nine months of the year. Current expectations are for local economic output to increase during 2024 in light of vehicle production and sales projections. This article explores the 2024 data, as well as what is anticipated for 2025.
Key measures
Employment and labor force: After the Great Recession, the Columbus MSA exhibited increases in its average annual labor force and employment from 2011 to 2019. The labor force grew by a compound annual growth rate of 1.5% per year, equating to total growth of 5,185 people in the labor force over that period. Employment over this period grew by a 2.2% CAGR, equating to an addition of 7,036 employed persons during this eight-year stretch. However, Columbus has yet to fully recover its labor force after the pandemic, a time when the MSA experienced a loss of approximately 10,000 jobs in early 2020.
Figure 3: Columbus MSA labor force and employment
Note: Data are not seasonally adjusted.
Source: Local Area Unemployment Statistics (LAUS), U.S. Bureau of Labor Statistics
We should note, Columbus has historically reflected a labor force participation rate higher than both the state of Indiana and the nation. As is evident in Figure 4, the Columbus labor force participation rate peaked in 2016 and was followed by a steady decline in participation through the pandemic and into 2021. During this period, the Columbus labor force participation rate declined in relation to both the state and national rates. This trend may reflect the aging population in Columbus, as the number of residents over the age of 65 continues to increase.
Figure 4: Labor force participation rate
Note: Data for Columbus MSA are not seasonally adjusted. Data for Indiana and the U.S. are seasonally adjusted.
Source: Local Area Unemployment Statistics (LAUS), U.S. Bureau of Labor Statistics and the American Community Survey, 1-year estimates from the U.S. Census Bureau
Unemployment: As the nation recovered from the pandemic’s economic disruption, the unemployment rate for Columbus returned to 2.0% in September 2022 (not seasonally adjusted) before increasing in 2023 and 2024. The Columbus unemployment rate in September 2024 is equal to or slightly lower than any of the regional metros and micros, except for Cincinnati and Seymour.
Table 1: September unemployment rate comparison for selected Indiana metros and micros
| Geography | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|---|---|
| U.S. | 4.1% | 3.6% | 3.3% | 7.7% | 4.6% | 3.3% | 3.6% | 4.4% |
| Indiana | 3.2% | 3.0% | 2.8% | 6.0% | 2.9% | 2.5% | 3.0% | 4.4% |
| Bloomington | 3.2% | 2.9% | 2.6% | 4.9% | 2.5% | 2.3% | 2.9% | 4.0% |
| Cincinnati* | 2.6% | 2.6% | 2.4% | 4.7% | 2.4% | 2.0% | 2.5% | 3.5% |
| Columbus | 2.4% | 2.1% | 2.0% | 5.0% | 2.5% | 2.0% | 2.6% | 3.8% |
| Evansville | 2.8% | 2.7% | 2.5% | 5.5% | 3.0% | 2.4% | 2.9% | 3.9% |
| Greensburg | 3.6% | 3.1% | 3.0% | 5.3% | 2.5% | 2.1% | 3.0% | 4.1% |
| Indy-Carmel-Anderson | 3.1% | 2.8% | 2.5% | 6.2% | 3.1% | 2.4% | 2.8% | 3.9% |
| Kokomo | 3.3% | 3.1% | 3.2% | 7.8% | 6.4% | 4.2% | 3.9% | 7.9% |
| Louisville* | 3.2% | 3.1% | 2.7% | 5.6% | 2.7% | 2.3% | 2.8% | 3.9% |
| North Vernon | 3.2% | 2.9% | 2.4% | 5.2% | 3.1% | 2.7% | 2.9% | 4.0% |
| Seymour | 2.7% | 2.5% | 2.2% | 4.7% | 2.7% | 2.3% | 2.5% | 3.5% |
* Only the Indiana portion of the metro is included.
Note: Data are not seasonally adjusted. Red cells indicate the highest rate and green cells indicate the lowest rate for each year.
Source: STATS Indiana, using Local Area Unemployment Statistics (LAUS) data from the U.S. Bureau of Labor Statistics
Weekly earnings: Average weekly earnings for the Columbus MSA experienced impressive 36% growth from a low of $729 in 2009 to $996 in 2018. However, average weekly earnings then declined for three consecutive years. A turnaround was noted in 2022, but that was followed by a 7% decline in 2023 and an 11% decline in the first nine months of 2024. This decline is due in part to decreases in weekly hours. Figure 5 shows the average weekly earnings data since 2008.
Figure 5: Total private average weekly earnings in the Columbus MSA
Note: Data are not seasonally adjusted. 2024 data are values for August 2024.
Source: Current Employment Statistics (CES), U.S. Bureau of Labor Statistics and Indiana Department of Workforce Development
Economic indicators
Vehicle sales and production: Light vehicle sales in the United States peaked in 2016, with approximately 17.5 million units sold.1 Moving forward from 2016, we generally saw declines each year to 2022, when less than 13.8 million units were sold. In 2023, sales increased to about 15.5 million units, as vehicle availability and pent-up demand impacted vehicle sales. We should note the average age of vehicles in the U.S. has increased to 12.6 years, a record high.2 This increase in vehicle age may support increased new vehicle sales rates during the next few years.
Local building permits and residential housing sales: Building permits growth rate is a leading indicator of economic activity. Following a recovery in building permits in 2020 and 2021 (see Figure 6), building permits declined in 2022 and then further accelerated downward in 2023 before partially recovering in 2024. Interest rates rose from January 2022 until July 2023 at a rate not seen since 1980 and the cost of construction continues at elevated levels. These factors are reflected in residential housing sales for the first nine months of 2023 and 2024. Both year-to-date values are approximately 750 units, well below the prior low of 844 housing sales in 2019. The lack of available and affordable new and existing housing in the Columbus MSA may continue as a drag on economic growth in the near term.
Figure 6: Local fiscal year building permit trends for the Columbus MSA
Note: The fiscal year is October to September.
Source: U.S Census Bureau
Local real GDP growth: From 2016 to 2022, Columbus chained GDP grew at a CAGR of 1.8%, equal to Bloomington, Cincinnati and Louisville. This period includes a 7.5% rebound in 2018 (see Figure 7), before declining again in 2019 and 2020. Columbus GDP in 2021 rebounded by 4.1% followed by a 7% increase in 2022 (the most recent data available for the MSA). This rebound is due to a strong 13% rebound in manufacturing activity, similar to increases seen in 2013 (+11.2%) and 2018 (+11.4%). Table 2 reflects GDP change for the nation and several Indiana metros. Only Bloomington, Columbus and Kokomo experienced GDP declines in both 2019 and 2020. The Columbus and Kokomo GDP fluctuations reflect the cyclical nature of a manufacturing/durable goods-based economy.
Figure 7: Year-over-year chained GDP growth
Source: U.S. Bureau of Economic Analysis, chained GDP
Table 2: Annual GDP growth rate comparison for selected metros
| Geography | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 5-year average |
|---|---|---|---|---|---|---|---|---|---|
| U.S. | 1.8 | 2.5 | 3.0 | 2.6 | -2.2 | 6.1 | 2.5 | 2.9 | 2.4 |
| Indiana | 2.1 | 2.6 | 3.1 | 0.5 | -2.9 | 7.6 | 3.1 | 1.3 | 2.3 |
| Bloomington, IN | 2.7 | 6.2 | 3.6 | -1.1 | -4.0 | 3.2 | 3.6 | 1.1 | |
| Cincinnati, OH | 3.7 | 3.1 | 0.0 | 4.9 | -2.0 | 4.1 | 1.0 | 1.6 | |
| Columbus | -1.9 | 1.2 | 7.5 | -1.0 | -7.3 | 4.1 | 7.0 | 2.1 | |
| Evansville, IN | 2.0 | 7.0 | 2.9 | 5.7 | -4.9 | 8.8 | -2.5 | 2.0 | |
| Indianapolis-Carmel-Anderson, IN | 2.4 | 2.4 | 3.6 | 2.6 | -1.4 | 6.4 | 3.3 | 2.9 | |
| Kokomo, IN | -2.3 | -2.5 | 2.6 | -0.1 | -5.7 | 8.8 | 10.1 | 3.1 | |
| Louisville, KY | 1.9 | 1.7 | 1.2 | 3.8 | -1.9 | 4.5 | 1.7 | 1.9 |
Note: Shaded cells indicate declines. 2023 data was not available for metros at the time of this writing.
Source: U.S. Bureau of Economic Analysis, chained GDP
Outlook
Upside potential
- Personal consumption expenditures have flattened slightly following the jump at the end of the pandemic. Even with increases in personal savings consuming a larger portion of disposable income, personal consumption expenditures, including new vehicles, can be expected to increase during 2025.
- “Buy America” elements within the Inflation Reduction Act of 2022 may create additional opportunities for existing automotive suppliers who produce parts for electric vehicles (EVs). Those same incentives are expected to attract new investments by battery manufacturers throughout the U.S.
- Cummins is projected to conclude 2024 with sales equal to 2023 for the year. Sales for 2025 are projected to increase slightly from the 2024 level. Cummins’ third quarter report indicated domestic sales had declined by 1%, while international sales increased by 2%. Future sales may be impacted by trade restrictions.
- The Greater Columbus Indiana Economic Development Board has successfully attracted investment and facility growth for the Columbus MSA. The expansion of Toyota Material Handling and the location of the King’s Hawaiian and Grillo Pickle manufacturing facilities will bring jobs to the community in 2027. The Ninth Avenue Foods facility is expected to add 101 jobs to the local economy in 2025.3
Downside potential
- New orders for manufactured durable goods decreased in three of the past four months. Transportation equipment orders were the driver of the overall decrease in durable goods new orders during that time.4
- Residential housing sales and building permits may continue a slow recovery in 2025, as higher interest rates and higher prices continue to constrain demand and affordability.
- Local GDP growth may be hindered by a lack of available workers. This is partially due to the loss of labor force during the pandemic and also commuting patterns where fewer people are commuting into the Columbus MSA and more people are commuting out of the MSA for work. Continuing the sentiment from the previous forecasts, Columbus continues to have a high rate of labor force participation (66%), relatively low unemployment and competitive weekly earnings, which also may limit employers’ ability to expand their workforce.
Forecast for 2025
Based on the above review of economic data, Columbus may experience flat to slightly higher real GDP growth between 0.0% and 2.0% in 2025. Weakness in the automotive and durable goods sector, fueled by continuing high interest rates combined with low consumer confidence, may be key to this scenario.
Unemployment may increase slightly to between 4.0% and 4.5% in 2025 due to potential slack in the manufacturing sector and the net addition of up to 500 new entrants into the job market. In this scenario, the number of employed is expected to decrease by between 0 and 300 in 2025.
Notes
- Carlier, Mathilde. “Light vehicle retail sales in the United States from 1976 to 2023.” Ward’s reported by Statista, February 28, 2023. https://www.statista.com/statistics/199983/us-vehicle-sales-since-1951/.
- Parekh, Nishant and Campau, Todd. “Average age of vehicles hits new record in 2024.” S&P Global, May 22, 2024. https://www.spglobal.com/mobility/en/research-analysis/average-age-vehicles-united-states-2024.html.
- Greater Columbus Economic Development Board News, November 2024. Retrieved November 6, 2024 from https://www.columbusin.org/news/.
- “Monthly advance report on durable goods manufacturers’ shipments, inventories and orders, October 2024.” U.S. Census Bureau. Retrieved November 6, 2024 from https://www.census.gov/manufacturing/m3/adv/current/index.html.
