Kokomo forecast 2025

Dmitriy V. Chulkov

Professor of Business Analytics and Economics
School of Business, Indiana University Kokomo

As part of an annual regional economic analysis series, this article presents economic data and forecasts for the Kokomo metropolitan statistical area (MSA). The review also looks at the Indiana University Kokomo service region, a region in north central Indiana that centers around the city of Kokomo.¹

The Kokomo regional economy is driven by three key sectors: manufacturing, services and agriculture. Notably, manufacturing remains a cornerstone of the local economy. Goods-producing industries constitute a third of total employment in the region, a larger share than both the state and national averages.

While the unemployment rate in Kokomo was higher than the state and national averages in 2024, the region saw a general convergence of employment and unemployment figures to long-term trends. The economic fortunes of the Kokomo MSA are linked to its robust manufacturing sector. The construction of two new electric vehicle (EV) battery manufacturing facilities by Stellantis and Samsung SDI, along with additional investments from suppliers in the EV battery supply chain, is poised to boost employment in the region and increase its diversification. These developments position the Kokomo MSA for growth in the near future.

Employment and unemployment

Following the coronavirus pandemic and the ensuing economic recovery, the employment situation in the region indicated a tight labor market. In the past year, however, the employment and unemployment figures in the region returned closer to their long-term natural rates. Unemployment rates, which reflect the percentage of the labor force that is unemployed, fluctuated between 3% and 5% in most of the region’s counties, aligning closely with the natural rate of unemployment. Meanwhile, the labor force has grown overall.

Figure 1 presents an overview of the region’s unemployment rates. Most of the counties in the region demonstrated similar movements in their unemployment rate, indicating a common economic structure. Counties with more diversified local economies, such as Hamilton County, were at the lower end of the scale. Meanwhile, Howard County, including the city of Kokomo, had the highest unemployment rate in the region, a rate that was consistently above the regional averages. Although the number of jobs in Howard County remained relatively stable over the past year, a significant increase in the labor force in 2024 has contributed to an elevated unemployment rate. Howard County’s economy, which features a higher concentration of manufacturing jobs compared to both the region and the state, is particularly sensitive to fluctuations in the manufacturing sector. The largest manufacturing employer, Stellantis, continued to restructure its facilities in the region, as its Tipton transmission plant was put up for sale and employees were reassigned.²

Figure 1: Regional unemployment rates by county

Note: Unemployment rates are not seasonally adjusted.
Source: STATS Indiana, using Local Area Unemployment Statistics (LAUS) from the U.S. Bureau of Labor Statistics

Table 1 shows the employment landscape in the Kokomo MSA, highlighting the changes in employment between 2023 and 2024. The share of goods-producing jobs in the Kokomo region is close to a third of total employment, higher than the Indiana and national averages. In the services sector, the most important industries include health care and social services (with 15.5% of total employment) and retail trade (with 12.2%). The overall employment in the Kokomo MSA showed a healthy increase of 3.5% over the past year, with the largest increases coming in the construction; arts, entertainment and recreation; health care and social services and manufacturing sectors. This surge is largely attributed to substantial investments by Stellantis and Samsung SDI in the construction of two StarPlus Energy EV battery factories in Kokomo. Many of the service-producing industries demonstrated little change in overall employment.

Income and housing prices

The impact of the aforementioned investment in two StarPlus Energy EV battery plants may also be seen in wage and personal income statistics. Table 2 presents a summary of the average wage data for the Kokomo MSA. Average weekly wages in most industries increased between 2023 and 2024. The overall increase in average weekly wages was 5.1%.

The biggest wage increases were observed in the construction (+45.6%), professional services (+39.4%) and transportation and warehousing (+10.8%) sectors. There was a modest decrease in the manufacturing sector’s average wage that may be attributed to the automotive market’s demand challenges, which have led to some restructuring in the region’s automotive industry production.

The housing market in the Kokomo MSA also showed steady growth. According to the October 2024 report from Zillow.com, the average home price in Howard County reached $174,900, increasing by 6.6% in the past year. The average home value increased by 52.1% over the past five years.³

As incomes in the region increase and new employees join the StarPlus Energy EV facilities, the Kokomo housing market will remain limited. Real estate statistics from Zillow also show that houses sold quickly, with the average listing moved to pending in just eight days (as of September 2024). Figure 2 shows the trend in average house value for the Kokomo MSA. The Zillow forecast for house values anticipates a further increase of 1.7% in 2025.

Figure 2: Average house value in Kokomo MSA

Note: Values from January 2019 to September 2024 are data. Values from October 2024 to February 2025 are projections.
Source: Zillow.com

Economic forecast

In the past year, the Kokomo region has received significant new investments that change the outlook for manufacturing in the region. Automotive manufacturer Stellantis and Samsung SDI joined forces in the StarPlus Energy joint venture to build two new EV battery manufacturing facilities in Kokomo.

The first battery “gigafactory” built with an investment of $2.5 billion is scheduled to start production in 2025. Its planned annual production capacity is 33 gigawatt hours (GWh). The second EV battery plant is expected to begin production in early 2027, doubling the venture’s production capacity. The total StarPlus Energy investment stands at over $6.3 billion. The two factories will create 2,800 new jobs, which is nearly 8% of current Kokomo MSA employment. The new facilities will supply battery modules for EVs produced at Stellantis North American factories.⁴

Investments by the StarPlus Energy joint venture are supported by significant incentive packages from the city of Kokomo and the Indiana Economic Development Corporation. This investment was further enhanced in 2024, as the U.S. Department of Energy announced a new $250 million grant to convert a Stellantis transmission plant in Kokomo to make electric drive modules for EVs.⁵

Major investments by StarPlus Energy, as well as the re-tooling of existing manufacturing facilities, are expected to have a positive impact on the region’s employment and wages in the upcoming two years. In the past year, Kokomo has lagged neighboring metropolitan areas in employment growth. However, this pattern is expected to be reversed in 2025 and 2026. Economic forecasts made by the Indiana University Center for Econometric Model Research (CEMR) indicate that Kokomo is poised to shift to significant growth in total employment in the next two years (see Figure 3). Kokomo’s employment growth is expected to surpass 4% over that time.⁶

Figure 3: Average annual employment growth rate data and forecast in selected Indiana MSAs, 2023-2026

Note: The past year refers to the average annual growth rate from 2022 Q4 to 2023 Q4. The next two years refers to the average annual growth rate from 2023 Q4 to 2025 Q4.
Source: Indiana University Center for Econometric Model Research

CEMR forecasts use econometric models to project employment growth and unemployment rates for the state of Indiana. These forecasts use labor market data from the U.S. Bureau of Labor Statistics. Current data reveal that the Kokomo MSA lags the state in both employment growth and unemployment rate. However, the unemployment situation in Kokomo is forecasted to improve over the next two years with strong employment growth.

As seen in Figure 4, the unemployment rate in the Kokomo MSA is expected to decline to around 4% by the second quarter of 2026. As unemployment rates in other parts of Indiana approach their long-term averages, Kokomo is also anticipated to align more closely with the state’s natural rate of unemployment.

Figure 4: Unemployment rate data and forecast in selected Indiana MSAs, 2023-2026

Source: Indiana University Center for Econometric Model Research

Post-election developments in national fiscal policies and the continuing reduction of interest rates by the Federal Reserve will impact the regional economy in 2025. In this evolving economic landscape, long-term business investments, such as the StarPlus Energy EV battery factories, are becoming increasingly important. These initiatives not only promise to bolster the local economy in the near term, but they also lay the groundwork for sustained growth in the region.

Increased incomes of employees involved in the construction and operation of these new facilities will create a multiplier effect in the region resulting in increased economic activity. The region has already seen positive impacts on its construction industry and housing market. As the StarPlus Energy facilities become operational, the logistics and transportation, retail, hospitality and health care sectors should benefit from increased demand. This will help create a more diversified economy in the Kokomo region.

Notes