Indianapolis forecast 2025

Executive Director, Indiana Business Research Center, Kelley School of Business, Indiana University
Economic activity
U.S. real gross domestic product (GDP) growth of 2.7% in 2024 will give way to 2.1% in 2025. Real GDP growth in Indiana is expected to be 2.1% in 2024 and 2.9% in 2025. This compares with a real GDP growth forecast for metropolitan Indianapolis of 2.3% in 2024 and 3.1% in 2025. Real economic activity in the Indianapolis region is expected to grow slightly faster than the nation and the state.
Several factors contribute to a resurgent Indianapolis economy. Metropolitan area population growth of 1.2% exceeds statewide and nationwide growth of close to 0.5%.1,2,3 A national rebound in durable goods purchases sparked by a decline in interest rates disproportionately benefits a manufacturing-intensive Indianapolis industry base. Investment in downtown amounts to $9 billion in new capital projects.4 Convention business has made a strong return. NBA All-Star Weekend, the U.S. Olympic Swimming Trials, Taylor Swift, Gen Con and the National Eucharistic Conference are among 550 signature events that made 2024 a banner year for tourism in Indianapolis.5 Record Eli Lilly profits and share price increases elevate personal wealth and philanthropic capacity in the metropolitan area.6 They also fuel new cumulative investment of $13 billion by the company in new manufacturing capacity in Boone County.7
The comparative trajectory of Indianapolis has improved since last year. Revisions in measurement reveal that previously used Bureau of Economic Analysis data understated real GDP growth in the Indianapolis metropolitan area through 2021. The addition of 2022 data revealed newfound comparative strength for Indianapolis. Between 2017 and 2022, real per capita GDP growth of 10% in the Indianapolis metropolitan area exceeded 9.2% nationwide.8 This reversed real per capita GDP growth that significantly lagged the nation between 2007 and 2017.9
Workforce and wages
The August 2024 unemployment rate (not seasonally adjusted) in the Indianapolis metropolitan area was 4.0%, a level notably higher than 3.2% in August 2023. However, this was lower than the August 2024 state rate of 4.5% and national rate of 4.4%. Between August 2023 and August 2024, the Indianapolis labor force grew 1.3% compared to growth of 0.6% for the state and 0.4% for the nation.10
Average hourly earnings for all private sector employees in the Indianapolis metropolitan area increased 4.1% between September 2023 and September 2024. This contrasts with a state increase of 3.9% and a national increase of 4.4%. Recent wage growth has more closely tracked national growth than in years past. The $31.68 earned by the average worker in metropolitan Indianapolis fell 10.7% short of the $35.46 earned by the average worker nationwide in September.11
The profile of the occupational portfolio in the Indianapolis metropolitan area has deteriorated since 2019. Between May 2019 and May 2023, employment in life, physical and social science occupations fell 12.2% and employment in architecture and engineering occupations fell 7.4% (see Table 1). Strong growth is needed in both occupational categories if Indianapolis is going to remain strong in life sciences and advanced manufacturing. During this same period, transportation and material movement occupations grew 16.7%, reflecting rapid expansion in the region as a national logistics hub. Many of the fastest-growing occupations paid at or below average wages, while many of the fastest-shrinking occupations paid above average wages. These results reinforce a narrative that Indianapolis excels in growth of low-paying jobs. Over time, such growth increases the income gap between Indianapolis and other regions.
Table 1: Employment and wage data for Indianapolis-Carmel-Anderson MSA
Occupation | 2019 employment |
2023 employment |
2019-2023 growth |
Percent of hourly median wage |
---|---|---|---|---|
Life, physical and social sciences | 10,180 | 8,940 | -12.2% | 147% |
Architecture and engineering | 15,600 | 14,440 | -7.4% | 175% |
Arts, design, entertainment, sports and media | 15,610 | 14,540 | -6.9% | 100% |
Sales and related | 98,960 | 93,770 | -5.2% | 77% |
Education, training and library | 50,670 | 48,200 | -4.9% | 108% |
Computer and mathematical | 34,140 | 32,950 | -3.5% | 186% |
Office and administrative support | 136,100 | 131,470 | -3.4% | 92% |
Production | 69,680 | 67,320 | -3.4% | 94% |
Food preparation and service | 93,720 | 92,210 | -1.6% | 62% |
Personal care and service | 18,820 | 18,930 | 0.6% | 64% |
Health care practitioners and technology | 75,910 | 78,050 | 2.8% | 166% |
Protective service | 23,680 | 24,380 | 3.0% | 102% |
Construction and extraction | 42,090 | 43,520 | 3.4% | 126% |
Management | 61,090 | 63,770 | 4.4% | 224% |
Installation, maintenance and repair | 40,270 | 42,920 | 6.6% | 116% |
Building and grounds clean and maintenance | 27,310 | 29,740 | 8.9% | 76% |
Health care support | 37,080 | 41,090 | 10.8% | 77% |
Legal | 7,720 | 8,580 | 11.1% | 190% |
Business and financial operations | 58,960 | 65,600 | 11.3% | 159% |
Transportation and material movement | 124,650 | 145,510 | 16.7% | 87% |
Community and social services | 14,150 | 17,190 | 21.5% | 103% |
Farming,fishing and forestry | 450 | 630 | 40.0% | 83% |
Total occupations | 1,056,840 | 1,083,750 | 2.5% | 100% |
Source: U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics (OEWS)
Unemployment is expected to average 4.2% nationally, 3.8% in the state and 3.5% in the Indianapolis metropolitan area during 2025. Wage growth is expected to average 3.7% nationally and 3.9% in both the state and Indianapolis region. Faster wage growth than the nation for Indianapolis naturally follows faster productivity growth than the nation, which was recently revealed by new data.12 This suggests a possible reversal in the widening income gap between Indianapolis and the rest of the nation, but the continued loss of high-value occupations makes this hard to sustain.
Residential real estate
Mortgage rates are expected to fall to just over 6% by the end of 2025. This will fuel slightly more activity in Indianapolis residential real estate markets. Construction of new houses should accelerate in the metropolitan area, especially in peripheral suburbs outside of Marion County. National residential investment is supposed to grow 4% in 2025 after just 1% growth in 2024. Upward pressure on housing prices has weakened. The median listing price for a house in the Indianapolis metropolitan area fell 1.5% from $329,900 in September 2023 to $324,950 in September 2024. This compares with no change from $295,000 in Indiana and a 1.0% decrease from $429,500 to $425,000 nationwide over the same period.13
Notes
- Macrotrends. 2024. “Indianapolis metro area population 1950-2024.” https://www.macrotrends.net/global-metrics/cities/23017/indianapolis/population.
- Macrotrends. 2024. “Indiana population 1900-2023.” https://www.macrotrends.net/global-metrics/states/indiana/population.
- Macrotrends. 2024. “U.S. population growth rate 1950-2024.” https://www.macrotrends.net/global-metrics/countries/usa/united-states/population-growth-rate.
- Russell, J. and Shuey, M. 2023. “Tale of two downtowns: $9B set to be invested in projects, even as business district struggles with recovery.” Indianapolis Business Journal. February 17. https://www.ibj.com/articles/tale-of-two-downtowns.
- Shuey, M. 2023. “City eyeing big convention year, topped by five major ones.” Indianapolis Business Journal. December 27. https://www.ibj.com/articles/city-eyeing-big-convention-year-heres-the-5-largest.
- Kaufman, M. 2024. “Pete the Planner talks impact of Lilly’s success on Indiana.” Inside Indiana Business. August 21. https://www.insideindianabusiness.com/articles/pete-the-planner-talks-impact-of-lillys-success-on-indiana.
- Guffey, A. 2024. “Eli Lilly plans $4.5 billion facility in LEAP District, bringing investment to $13 billion.” Indianapolis Star. October 2. https://www.indystar.com/story/money/2024/10/02/eli-lilly-invests-another-4-5-billion-for-leap-district-in-lebanon/75465073007/.
- Powell, P.T. 2024. “Naptown and Beantown: Insights on prosperity for Central Indiana.” Indiana Business Review 99(3). https://www.ibrc.indiana.edu/ibr/2024/special/article1.html.
- Powell, P.T. and Hudelson-Zipper, R. 2023. “Making the Indianapolis workforce more competitive.” Indiana Business Review 98(3). https://www.ibrc.indiana.edu/ibr/2023/special/article2.html.
- Bureau of Labor Statistics data available from Federal Reserve Economic Data (FRED) at https://fred.stlouisfed.org/. The Indianapolis civilian labor force was 1,135,734 in August 2023 and 1,150,846 in August 2024. The Indiana civilian labor force was 3,413,812 in August 2023 and 3,435,045 in August 2024. The United States civilian labor force was 168,049,000 in August 2023 and 168,763,000 in August 2024.
- Bureau of Labor Statistics Current Employment Survey (CES) data available from Federal Reserve Economic Data (FRED) at https://fred.stlouisfed.org/. Average hourly earnings of all total private sector employees in Indianapolis were $30.43 in September 2023 and $31.68 in September 2024. Average hourly earnings in Indiana were $29.83 in September 2023 and $31.00 in September 2024. Average hourly earnings in the United States were $33.96 in September 2023 and $35.46 in September 2024.
- Powell, P.T. 2024. “The economic science of raising Hoosier incomes.” Indiana Business Review 99(2). https://www.ibrc.indiana.edu/ibr/2024/summer/article3.html.
- Realtor.com data available from Federal Reserve Economic Data (FRED) at https://fred.stlouisfed.org/.