South Bend and Elkhart forecast 2025

Hong Zhuang, Ph.D.

Director of the Bureau of Business and Economic Research and Professor of Economics, Judd Leighton School of Business and Economics, Indiana University South Bend

The labor markets in the South Bend-Mishawaka and Elkhart-Goshen MSAs saw substantial declines in the labor force while unemployment rates moved higher in 2024, under the influence of contractionary monetary policy. While total employment increased in the South Bend-Mishawaka MSA, it declined in the Elkhart-Goshen MSA. Housing market supply increased in St. Joseph County and housing price inflation eased.

Labor force and employment

The combined labor force of the South Bend-Mishawaka and Elkhart-Goshen MSAs averaged 263,381 in the first eight months of 2024, based on data from the U.S. Bureau of Labor Statistics. This figure represents a decrease of 5,317 compared to the same period in 2023.¹

The monthly trends of the labor force and employment of the combined region are illustrated in Figure 1.² Specifically, the South Bend-Mishawaka MSA saw a reduction of 872 individuals in its labor force, while the Elkhart-Goshen MSA experienced a larger decline of 4,446.³ When comparing these figures to the pre-pandemic level, the South Bend-Mishawaka labor force remains 7,450 individuals below the 2019 figure, while the Elkhart-Goshen labor force is down by 6,676.⁴

From January to August of 2024, total employment in the combined region stood at 251,224, marking a decline of 6,233 jobs compared to the previous year (-2.4%). Breaking it down further, the South Bend-Mishawaka MSA lost 1,753 jobs (-1.2%), while the Elkhart-Goshen MSA experienced a sharper decline of 4,480 jobs (-4.2%). For comparison, employment also decreased at the state and national levels during this period, with rates of -1.1% and -0.3%, respectively.

Figure 1: Monthly labor force and employment in the South Bend-Mishawaka and Elkhart-Goshen MSAs combined

Note: Data are shown through August 2024 and are not seasonally adjusted.
Source: STATS Indiana, using U.S. Bureau of Labor Statistics data

Unemployment

In 2024, unemployment rates rose in both the South Bend-Mishawaka and Elkhart-Goshen MSAs. Figure 2 illustrates the unemployment trends in these MSAs from January 2005 to August 2024. The South Bend-Mishawaka MSA experienced an average unemployment rate of 4.7% in 2024, an increase of 0.6 percentage points from 2023 and 0.9 percentage points higher than the 2019 rate.⁵ Similarly, the Elkhart-Goshen MSA saw its jobless rate climb to 4.4%, an increase of 0.2 percentage points from 2023 and 1.2 percentage points above the pre-pandemic rate in 2019.⁶ Notably, both MSAs exceeded the state (4.2%) and national (4.1%) unemployment rates for 2024. 

Figure 2: Monthly unemployment rate in the South Bend-Mishawaka and Elkhart-Goshen MSAs

Note: Data are shown through August 2024 and are not seasonally adjusted.
Source: STATS Indiana, using U.S. Bureau of Labor Statistics data

Employment by industry

According to the business establishment survey from the Bureau of Labor Statistics, total nonfarm employment in the South Bend-Mishawaka MSA averaged 142,538 between January and August 2024, reflecting an increase of 1,525 jobs (+1.1%) compared to 2023.^7,8 Table 1 provides a detailed breakdown of sectoral employment changes during this period. However, despite recent gains, total nonfarm employment in 2024 remains 3,687 jobs below the 2019 level.

Five sectors saw notable job growth in 2024: private educational and health services (+863); leisure and hospitality (+750); natural resources, mining and construction (+338 jobs); government (+88) and other services (+88). On the other hand, several sectors experienced job losses, including professional and business services (-400); manufacturing (-75); financial activities (-75); trade, transportation and utilities (-38) and information (-13).

In contrast, the Elkhart-Goshen MSA faced an overall decline in employment. Between January and August 2024, total nonfarm employment averaged 133,288, a decrease of 2.3% from 2023 and 3.4% below the pre-pandemic level in 2019.⁹ Significant job losses occurred in manufacturing (-3,625 jobs) and trade, transportation and utilities (-100).

However, some sectors experienced growth, including private educational and health services (+213); other services (+163); natural resources, mining and construction (+88) and government (+75). Minor increases were experienced in the leisure and hospitality (+38); professional and business services (+25) and financial activities (+13) sectors, while employment in the information sector remained unchanged.

Table 1: Year-to-date employment by industry and metro area

Note: Data are for January through August 2024. Data are not seasonally adjusted.
Source: STATS Indiana, using Current Employment Statistics (CES) data from the U.S. Bureau of Labor Statistics

Local wages and hours worked

In 2024, both MSAs experienced a slowdown in labor cost increases. In South Bend-Mishawaka, average hourly earnings for the private sector rose by 1.3%, reaching $28.90. In Elkhart-Goshen, average hourly earnings experienced a slight decline, dropping to $31.34. At the same time, average weekly hours decreased to 32.4 hours (-1.6%) in South Bend-Mishawaka and 35.7 hours (-0.04%) in Elkhart-Goshen. As a result, average weekly earnings fell slightly in both MSAs, declining to $936.80 (-0.4%) in South Bend-Mishawaka and $1,119.85 (-0.1%) in Elkhart-Goshen.

Housing

The local housing market gained momentum in 2024. Figure 3 illustrates the number of single-family residential building permits issued in St. Joseph County from January 2005 to August 2024. In the first eight months of 2024, 163 new permits were issued, a 16.4% increase compared to the previous year. However, this figure is still 7.9% below the pre-pandemic level of 2019. Additionally, data from the Indiana Association of Realtors shows an 11.7% increase in new listings for existing homes in St. Joseph County, along with a 4.5% increase in closed sales between January and August 2024. The median sales price rose by 3.0% in 2024, a much slower rate compared to the 16.3% spike experienced in 2022.

Figure 3: Single-family residential building permits issued in St. Joseph County

Note: Data are shown through August 2024.
Source: St. Joseph County Building Department forecast

Forecast

The 2025 labor market forecast offers both optimistic opportunities and cautionary elements. The most encouraging development is the Federal Reserve’s decision to end contractionary monetary policies, with a 50-basis-point (bps) reduction in the federal funds rate initiated in September 2024. Since early 2022, the Federal Reserve had raised interest rates to curb inflation, reaching a peak effective rate of 5.33% in August 2023—the highest since the 2007–2008 financial crisis. High interest rates raised financing costs, reducing household spending and deterring business investments. This policy successfully reduced aggregate demand and inflation, but also led to higher unemployment, with South Bend-Mishawaka’s unemployment rate rising from 3.7% in 2022 to 4.7% in 2024 and Elkhart-Goshen’s rate increasing from 2.4% to 4.4%.

As of October 2024, the federal funds rate has decreased to 4.83%, with further cuts anticipated in 2025.¹⁰ This shift is expected to boost household spending, especially on durable goods. Annual inflation has decreased from a high of 9.0% in June 2022 to 2.4% in October 2024.¹¹ If it aligns with the Federal Reserve’s 2% target, lower rates in 2025 and beyond could enhance consumer and business confidence, thereby increasing spending and investment.

For businesses, the combination of a relatively high unemployment rate and moderating inflation is beneficial, as it eases competition for talent and allows firms to hire more qualified workers, potentially improving productivity.

Despite the aforementioned positive trends, there are also risks looking ahead to 2025. The U.S. personal savings rate fell to 4.8% in August 2024, significantly lower than the pandemic average of 15.1% (from March 2020 to August 2021).¹² Additionally, any household savings accumulated during the pandemic were depleted by March 2024.¹³ Household debt reached an all-time high of $17.8 trillion in the second quarter of 2024, and default rates on credit cards and auto loans rose to 10.9% and 4.4%, respectively.¹⁴ Declining savings, depleted pandemic-era reserves and rising debt levels may limit consumption in 2025, especially among price-sensitive households.¹⁵

The unemployment rate in the South Bend-Mishawaka MSA is expected to be between 4.5% and 5.0% in 2025, due to these macroeconomic factors. The MSA started 2024 with an unemployment rate of 4.3% in January before falling to 4.0% in April and then rising to 5.2% in August. Although the monetary easing cycle began in September 2024, policy effects typically take time, so unemployment reduction may be gradual. Hourly wage growth in South Bend-Mishawaka will likely slow, though aggregate income may increase depending on work hours.

The housing market in St. Joseph County is expected to grow in 2025. Lower mortgage rates and stabilizing home prices will likely encourage sidelined buyers to reenter the market. Residential construction should also increase as growth in building material costs has slowed to align with the broader economy.¹⁶ Additionally, a relaxed labor market may reduce hiring costs for construction. Consequently, more new homes may be built. Lower mortgage rates will motivate existing homeowners to upgrade, increasing housing listings. Overall, we anticipate more supply, higher sales and an increase between 2% and 3% in home prices in 2025.

The Elkhart-Goshen MSA’s unemployment rate is also expected to range from 4.5% to 5.0%. Similar to South Bend-Mishawaka, unemployment in Elkhart-Goshen rose from 4.1% at the start of 2024 to 5.4% in July and 4.7% in August. This trend reflects a decline in manufacturing jobs closely tied to the RV industry. Manufacturing employment in Elkhart-Goshen surged to 76,800 between January and August 2022. However, demand for RVs has since declined due to rising prices and higher interest rates. RV shipments dropped from a peak of 600,240 units in 2021 to 313,174 units in 2023.¹⁷ However, 2024 saw some recovery, with 231,817 units shipped by August—an 8.6% increase over 2023 levels. In 2025, RV shipments are expected to approach 350,000 units. As demand stabilizes, the manufacturing sector will likely create new job openings, boosting labor force participation and gradually reducing unemployment.