Richmond forecast 2025
Director of the Business and Economic Research Center and Professor of Finance, Indiana University East
This article examines the recent performance of some key economic indicators and the 2025 economic outlook for the Richmond region, a region comprised of seven east-central Indiana counties: Fayette, Franklin, Henry, Randolph, Rush, Union and Wayne.
Manufacturing continues to be the region’s lead industry sector by employment, providing 12,894 jobs in 2024 Q1. Manufacturing is followed by health care and social services (8,262 jobs), retail trade (7,895 jobs) and accommodation and food services (4,635 jobs) (see Table 1).
According to 2022 U.S. Bureau of Economic Analysis data,1 Wayne County had the largest population and earned the highest total income in the region: approximately 31.6% of the region’s total population (209,627 people) earned about the same proportion (31.4%) of the region’s total income ($10.46 billion). Following Wayne County, Henry County housed close to one-quarter (23.3%) of the region’s total population and earned more than one-fifth (21.7%) of the region’s total income. Franklin County ($55,675) and Rush County ($55,087) had the highest per capita personal income (PCPI) values in the region, both reaching more than 94% of Indiana’s state PCPI ($58,323) and more than 84% of U.S. PCPI ($65,470). While Randolph County (+1.21%) experienced the most percentage growth in PCPI, Franklin County (-0.24%) and Union County (-0.11%) actually recorded slight declines in PCPI between 2021 and 2022.
Labor market
The average January-to-August monthly labor force of the region declined slightly (-0.33%) to 95,342 people in 2024 compared to the same period the year before (see Figure 1). While Henry County (+0.72%, 22,393 people), Randolph County (+0.46%, 11,642 people) and Rush County (+0.66%, 9,012 people) increased their labor force, the remaining counties in the region suffered declines as high as -2.6% in Franklin County.
Over the same eight months in 2024, the overall average monthly unemployment rate for the region was 4.31%, up by 0.78 percentage points from the year before. All the counties in the region had higher average unemployment rates in 2024 than the previous year.2 While Rush County continues to have the lowest average unemployment rate (3.46%) and Fayette County experienced the highest (5.68%), the rest of the region marked average monthly unemployment rates ranging between 3.50% and 4.54%.
Figure 1: Richmond region labor force and unemployment rate
Note: Data are not seasonally adjusted. August 2024 data are preliminary.
Source: Local Area Unemployment Statistics (LAUS) from the U.S. Bureau of Labor Statistics
Jobs and wages
The region added 712 new jobs to the private sector in 2024 Q1, as compared with the year before (see Table 1). This resulted in large part from the remarkable creation of 331 jobs in retail trade (+218) and wholesale trade (+113). Job gains were also recorded in educational services (+89), accommodation and food services (+80), other services (except public administration) (+66), transportation and warehousing (+57), construction (+48), management of companies and enterprises (+41) and utilities (+1). Significant job losses occurred in the manufacturing (-515) and professional, scientific and technical (-383) sectors. Additional job losses occurred in the following sectors: administrative, support, waste management and remediation (-88), real estate and rental and leasing (-59), finance and insurance (-56), information (-28), agriculture, forestry, fishing and hunting (-13), arts, entertainment and recreation (-9) and mining (-1).
Table 1: Employment by industry
| NAICS classification | Richmond region | Indiana | ||
|---|---|---|---|---|
| 2024 Q1 | One-year change | 2024 Q1 | One-year change | |
| Total all | 66,488 | 936 | 3,135,020 | 20,793 |
| Total private | 54,797 | 712 | 2,737,470 | 11,698 |
| Manufacturing | 12,894(D) | -515(ED) | 525,649 | -10,405 |
| Retail trade | 7,895 | 218 | 311,971 | -1,476 |
| Transportation and warehousing | 1,451(D) | 57(ED) | 165,704 | 2,690 |
| Agriculture, forestry, fishing and hunting | 27(D) | -13(ED) | 15,538 | 83 |
| Mining | 19(D) | -1(ED) | 5,302 | -91 |
| Utilities | 176(D) | 1(ED) | 13,145 | 213 |
| Construction | 3,046 | 48 | 158,698 | 6,209 |
| Wholesale trade | 1,703(D) | 113(ED) | 132,765 | 762 |
| Information | 343 (D) | -28(ED) | 26,837 | 108 |
| Finance and insurance | 1,499 (D) | -56(ED) | 103,563 | 500 |
| Real estate and rental and leasing | 279(D) | -59 | 35,480 | -336 |
| Professional, scientific and technical | 712(D) | -383(ED) | 148,215 | 769 |
| Management of companies and enterprises | 392(D) | 41(ED) | 35,203 | 448 |
| Administrative, support, waste management and remediation | 2,294(D) | -88(ED) | 167,312 | -9,825 |
| Educational services | 893(D) | 89(ED) | 54,036 | 1,880 |
| Health care and social services | 8,262(D) | 0(ED) | 444,194 | 18,464 |
| Arts, entertainment and recreation | 244 | -9(ED) | 36,277 | 1,766 |
| Accommodation and food services | 4,635(D) | 80(ED) | 264,551 | -2,559 |
| Other services (except public administration) | 1,682(D) | 66(ED) | 93,031 | 2,500 |
Notes: (D) indicates data with one or more counties excluded due to non-disclosure issues and (ED) illustrates an estimate made based on such data for 2023 Q1 and/or 2024 Q1.
Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW)
The region saw an average 3.3% increase in the private sector’s weekly wages at the beginning of 2024 (see Table 2). Only agriculture, forestry, fishing and hunting (-7.8%), management of companies and enterprises (-17.1%) and educational services (-11.5%) suffered declines in weekly wages. All the other industries recorded a rise ranging from 0.7% (retail trade) to 12.9% (mining).
Table 2: Average weekly wages by industry
| NAICS classification | Richmond region | Indiana | ||
|---|---|---|---|---|
| 2024 Q1 | One-year change | 2024 Q1 | One-year change | |
| Total all | $944 | 4.0% | $1,271 | 5.7% |
| Total private | $940 | 3.3% | $1,286 | 5.7% |
| Manufacturing | $1,188(D) | 3.3%(ED) | $1,773 | 11.5% |
| Retail trade | $613 | 0.7% | $723 | 1.4% |
| Transportation and warehousing | $1,178(D) | 6.7%(ED) | $1,111 | 0.6% |
| Agriculture, forestry, fishing and hunting | $638(D) | -7.8%(ED) | $957 | 1.9% |
| Mining | $709(D) | 12.9%(ED) | $1,629 | -0.9% |
| Utilities | $2,356(D) | 4.7%(ED) | $2,588 | 5.8% |
| Construction | $1,114 | 10.4% | $1,441 | 7.8% |
| Wholesale trade | $1,257(D) | 8.7%(ED) | $1,813 | 3.2% |
| Information | $877(D) | 8.4%(ED) | $1,638 | 3.6% |
| Finance and insurance | $1,492(D) | 3.4%(ED) | $2,148 | 4.2% |
| Real estate and rental and leasing | $773(D) | 10.3%(ED) | $1,225 | 4.1% |
| Professional, scientific and technical | $1,093(D) | 8.5%(ED) | $1,762 | 5.9% |
| Management of companies and enterprises | $1,917(D) | -17.1%(ED) | $2,824 | -2.2% |
| Administrative, support, waste management and remediation | $829(D) | 5.5%(ED) | $917 | 4.1% |
| Educational services | $575(D) | -11.5%(ED) | $969 | 4.3% |
| Health care and social services | $1,090(D) | 3.0%(ED) | $1,226 | 3.1% |
| Arts, entertainment and recreation | $481(D) | 8.3%(ED) | $960 | 10.3% |
| Accommodation and food services | $401(D) | 6.4%(ED) | $441 | 3.8% |
| Other services (except public administration) | $608(D) | 5.4%(ED) | $854 | 5.6% |
Note: (D) indicates data with one or more counties excluded due to non-disclosure issues and (ED) illustrates an estimate made based on such data for 2023 Q1 and/or 2024 Q1.
Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW)
Housing market
Over the past 12 months (measured from October 1, 2023 to September 1, 2024), Henry County added the highest percentage (19%) of homes to its market inventory as compared with the year before. This growth is very close to Indiana’s percentage growth of 21%. The other counties in the region, with the exception of Union and Wayne counties, also saw new listings rise. Not only did Wayne County experience a decline in new home listings (-3%), but it also saw a decline in its closed sales (-10%). Fayette (-12%) and Randolph (-21%) counties saw even more significant shrinkage in closed sales. The remaining counties in the region saw increases in closed sales ranging from 10% to 21%. While Henry County experienced the highest percentage growth in new pending contracts for 430 homes (+19%), Wayne (-8%) and Randolph (-2%) counties experienced percentage declines in this measure.
As of September 1, 2024, home sales in Franklin County were of relatively higher value (with a median monthly sale price of $288,000) than all the other counties in the region (data for Union County was unavailable). In addition, Franklin County homeowners realized the highest percentage (98.6%) of their listing prices when selling their homes. While maintaining the inventory in the housing market for the most prolonged period (4.9 months), it also took Franklin County homeowners the longest time to sell their homes, a median of 53 days from listing to pending.
Table 3: Housing market update, October 2023 to September 2024
| Indicator | Fayette | Franklin | Henry | Randolph | Rush | Union | Wayne | Indiana | |
|---|---|---|---|---|---|---|---|---|---|
| Supply | |||||||||
| Inventory (average daily inventory) | September 2024 | 34 | 30 | 57 | 20 | 27 | 1 | 162 | 14,763 |
| Month-over-month | 5% | -5% | 10% | -19% | -7% | 0% | 17% | 6% | |
| Year-over-year | 76% | 1% | 31% | -2% | -16% | -48% | 30% | 24% | |
| New listings (monthly total by listing date) | September 2024 | 22 | 13 | 40 | 14 | 13 | 2 | 89 | 8,271 |
| Month-over-month | 47% | -24% | -22% | 17% | 8% | 100% | -18% | -11% | |
| Year-over-year | 69% | -48% | 8% | 17% | -13% | ned | 3% | -3% | |
| Oct.-Sep. 2024 (Sum) | 171 | 196 | 439 | 181 | 187 | ned | 839 | 92,879 | |
| Sum change | 7% | 4% | 19% | 9% | 1% | ned | -3% | 21% | |
| Sales | |||||||||
| Closed sales (monthly total of closed sales) | September 2024 | 10 | 6 | 29 | 11 | 14 | n/a | 59 | 6,705 |
| Month-over-month | -17% | -33% | -17% | -27% | 8% | n/a | 11% | -5% | |
| Year-over-year | -33% | -25% | -3% | -15% | -18% | n/a | -8% | 1% | |
| Oct.-Sep. 2024 (Sum) | 116 | 161 | 410 | 128 | 169 | n/a | 653 | 75,533 | |
| Sum change | -12% | 21% | 15% | -21% | 10% | n/a | -10% | 13% | |
| New pending contracts (monthly total of newly pended properties) | September 2024 | 21 | 6 | 39 | 12 | 17 | n/a | 72 | 6,657 |
| Month-over-month | 91% | -45% | 8% | -25% | 13% | n/a | 24% | -10% | |
| Year-over-year | 110% | -68% | -2% | 20% | 31% | n/a | 18% | 6% | |
| Oct.-Sep. 2024 (Sum) | 132 | 154 | 430 | 159 | 176 | ned | 648 | 78,679 | |
| Sum change | 3% | 7% | 19% | -2% | 5% | ned | -8% | 18% | |
| Market momentum | |||||||||
| Median days on market (days from listing to pending) | September 2024 | 14 | 53 | 10 | 12 | 20 | n/a | 18 | 15 |
| Month-over-month | -4% | 89% | 150% | -64% | 290% | n/a | 20% | 15% | |
| Year-over-year | -44% | 77% | 150% | 140% | -68% | n/a | 200% | 50% | |
| Months of inventory (current supply vs. 12-month sales average) | September 2024 | 3.4 | 4.9 | 2 | 1.8 | 1.9 | 0.5 | 2.7 | 2.2 |
| Month-over-month | 26% | 43% | 33% | 11% | -13% | ned | 5% | 12% | |
| Year-over-year | 164% | 35% | 35% | 16% | 2% | ned | 41% | 22% | |
| Price | |||||||||
| Sale price (median monthly sale price) | September 2024 | $114,500 | $288,000 | $145,000 | $138,500 | $203,000 | n/a | $150,900 | $260,000 |
| Month-over-month | -16% | -8% | -28% | -15% | 50% | n/a | -6% | -2% | |
| Year-over-year | -18% | 33% | -12% | 63% | 40% | n/a | 1% | 5% | |
| Sale price as percentage of listing price (monthly average) | September 2024 | 93.1% | 98.6% | 95.0% | 92.2% | 92.2% | n/a | 95.1% | 96.0% |
| Month-over-month | 0% | 2% | -2% | -1% | -5% | n/a | -1% | 0% | |
| Year-over-year | 2% | 3% | -4% | 0% | 3% | n/a | -2% | -1% | |
Note: Year-to-date data (including detached single-family homes, condos and townhomes) reflect October 2023 through September 2024 data. ned and n/a indicate not enough data and not available, respectively.
Source: Indiana Real Estate Markets Report by the Indiana Association of Realtors
Outlook
Although its Present Situation sub-index declined by 1.4%, both the IU East Regional Business Confidence Index (IUERBCI) (+0.5%) and its Expectation sub-index (+2.2%) rose this year as compared to last year (see Table 4). This suggests that businesses in the region experienced a more challenging year in 2024 as compared to 2023. However, the businesses were looking forward to a better year in 2025.
Table 4: IU East Regional Business Confidence Index and its sub-indexes
| Indicator value | 2023 | 2024 | Indicator score | 2023 | 2024 |
|---|---|---|---|---|---|
| IU East Regional Business Confidence Index value | 86.43 | 86.88 | IU East Regional Business Confidence Index score | 2,089 | 2,100 |
| Annual change | 0.5% | ||||
| Present Situation Index value | 79.29 | 78.15 | Present Situation Index score | 831 | 819 |
| Annual change | -1.4% | ||||
| Expectation Index value | 90.95 | 93.00 | Expectation Index score | 935 | 956 |
| Annual change | 2.2% |
Source: The 2024 East-Central Indiana Business Survey, conducted by the IU East Business and Economic Research Center, September 2024
While one-quarter (25.7%) of the surveyed businesses in the region maintained their production/business activities in 2024 at about the same level as in 2023, more than two-fifths of them (44.3%) increased activities in some capacity. Most businesses (82%) maintained or expanded their employment in 2024. Less than one-tenth (8.8%) shrank their capital investment. Over four-fifths of the businesses surveyed experienced a rise in their costs of doing business. As reflected in the IUERBCI, 2024 was a challenging year, with only one-third (34%) of the businesses managing to increase their profitability. A quarter of the businesses preserved their 2023 profitability level.
In their planning for 2025, 88.5% of the surveyed businesses expected to increase or maintain their 2024 production/business activity level. Only 4.5% of the businesses planned to reduce their employment level; the rest planned to expand (25.9%) or maintain (69.6%) employment. More than 90% of the surveyed businesses planned on maintaining (57.7%) or increasing (35.1%) their capital investments in 2025. Of the surveyed companies, about two-fifths (39.8%) expect an increase in profitability, despite more than three-quarters (77.7%) of the survey participants anticipating an increase in the cost of doing business.
Over a quarter (25.7%) of the surveyed businesses anticipate the same business and economic conditions in 2025 as in 2024. Half (49.6%) were optimistic, while about a quarter (24.8%) were pessimistic about the 2025 conditions.
In the most recent (at the time of this writing) Federal Open Market Committee (FOMC) meeting held on September 18, 2024, the Federal Reserve Board (Fed) forecasted the following for the U.S.:3
Real GDP growth rate median: 2.0% for both 2024 and 2025 (0.1% worse than the June projection for 2024 and the same as the June projection for 2025)
Unemployment rate median: 4.4% for both 2024 and 2025 (both worse than the June projection)
Inflation rate median: 2.3% for 2024 and 2.1% for 2025 (both better than the June projection)
The October projections of U.S. real GDP growth by the International Monetary Fund (IMF) for 2024 and 2025 were 2.8% and 2.2%, higher than those made by the Fed, and up by 0.2% and 0.3% from their own July projections, respectively.4
Although looming uncertainty and persistent shocks exist, the unexpected upward trend supports the Conference Board’s October forecast of a rise of 2.5% in U.S. real GDP for 2024 and 1.7% for 2025.5
Summary
According to the aforementioned national and international economic development organizations, nationwide resilience for economic growth is expected to continue through next year. This is supported by economic data reflecting actual growth outperforming expectations in the second half of 2024. Even if some year-end loss of momentum occurs, the U.S. is expected to pick its economic activities back up in 2025. Robust consumer spending, a solid labor market and inflation converging to the target of 2% (implying possible further interest rate cuts) should give rise to a more favorable economic environment for doing business in the U.S. and the Richmond region next year.
However, one should also consider some potential negative ripples, including reduced consumer expenditures and business investments on certain items due to high financing costs resulting from uncertain and high interest rates. The implementation pace of new policies proposed by the new presidential administration will also add to business performance uncertainty in certain industries. Accordingly, we project the Richmond region’s 2025 unemployment rate to hang around 4%, with significant variations across counties and industry sectors.
Acknowledgments
The author deeply appreciates the feedback/support from Associate Dean Litao Zhong and Dean Kelly Wilkinson of the School of Business and Economics, Indiana University East.
Notes
- U.S. Bureau of Economic Analysis (BEA) Regional Fact Sheets, https://apps.bea.gov/regional/bearfacts/.
- Data (not seasonally adjusted) obtained from Local Area Unemployment Statistics (LAUS) from the U.S. Bureau of Labor Statistics, https://www.stats.indiana.edu/laus/laus_view3.html.
- Federal Open Market Committee, “Summary of economic projections,” September 18, 2024, https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240918.pdf.
- International Monetary Fund, “World economic output: Policy pivot, rising threats,” October 2024, https://www.imf.org/en/Publications/WEO/Issues/2024/10/22/world-economic-outlook-october-2024.
- Conference Board, “U.S. economy displays continued resilience,” October 11, 2024.
