Bloomington forecast 2026
Executive Director, Indiana Business Research Center, Kelley School of Business, Indiana University
Recent data suggests a year of economic stress for the Bloomington metropolitan area during 2025. See Table 1 for an economic comparison of the Bloomington metropolitan area with the West Lafayette metropolitan area – the other Indiana community anchored by a major state university – along with the Indianapolis metropolitan area, the state and the nation. Growth in economic activity in the region has been comparatively weak since before the pandemic in 2019. Real GDP in Bloomington grew 4.4% between 2019 and 2023, a rate significantly less than half of 11.2% real growth in the state economy over the same period.1 Jobs and wages retreated significantly in Bloomington between August 2024 and August 2025. Average hourly earnings fell 6.5%, employment decreased 2.6% and labor force size shrank 1.6%.2,3,4 In contrast, jobs and wages expanded in Indiana. Statewide, average hourly earnings rose 5.1%, employment increased 0.5% and labor force size grew 0.4%.5,6,7 Weak economic performance made Bloomington a negative outlier in a state that has recently beat the nation in wage and real GDP growth.
Table 1: Bloomington metropolitan area comparative economic performance
| Real GDP growth 2019-2023 | Wage growth 2024-2025 | Employment growth 2024-2025 |
Labor force growth 2024-2025 |
|
|---|---|---|---|---|
| Bloomington | 4.4% | -6.5% | -2.6% | -1.6% |
| West Lafayette | 4.9% | 0.3% | -0.9% | -0.6% |
| Indianapolis | 12.5% | 6.7% | 1.1% | 1.0% |
| Indiana | 11.2% | 5.1% | 0.5% | 0.4% |
| United States | 9.7% | 3.9% | 0.8% | 1.4% |
Source: U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics
The federal government froze or terminated 3,800 research grants that halted $3 billion in university research during 2025.8 The Indiana General Assembly reduced appropriations for higher education by 5%.9 Such government retrenchment naturally has a negative impact on metropolitan areas like Bloomington and West Lafayette that are economically dominated by a state research university. In May, Indiana University announced annual expense reductions of $100 million in response to federal and state funding pullbacks.10 A tighter and more scrutinous process for hiring came in July.11 Like Bloomington, West Lafayette struggled in 2025 while other regions of the state exhibited strong growth. Average hourly earnings in West Lafayette grew by only a trace while employment and the labor force shrank.12,13,14 Realignment of federal and state support for higher education will continue to challenge the Bloomington and West Lafayette economies in 2026.
Despite a challenging economic environment for higher education, Bloomington unemployment fell from 3.9% to 3.4% between August 2024 and August 2025.15 This compared well with a fall in state unemployment from 4.4% to 3.6% and a rise in national unemployment from 4.2% to 4.3%.16,17 Private business growth helped Bloomington sustain unemployment below the state and national rates and counteract reduced federal and state support for Indiana University. Private business establishments in Monroe County grew 4.6% from 3,318 in 2024 Q1 to 3,471 in 2025 Q1, compared to 2.8% statewide and 2% nationwide.18,19,20 New regional commercial activity – such as construction of the new $71 million convention center21, expansion of entrepreneurship in the Trades District fueled by $16 million from the Lilly Endowment22 and commitment of $200 million by Simtra to growth in its local manufacturing footprint23– complements an impressive rate of new business creation. These facts explain private business employment growth of 2.3% between August 2024 and August 2025 as seen in Table 2. Private businesses employ just under 3 in 4 (73.4%) workers in the Bloomington metropolitan area.
Table 2: Bloomington metropolitan area employment by industry
| Industry | Employment August 2024 | Employment August 2025 | Employment share August 2025 |
Employment growth 2024-2025 |
|---|---|---|---|---|
| Mining, logging and construction | 3,400 | 3,500 | 4.4% | 2.9% |
| Durable goods manufacturing | 6,000 | 5,900 | 7.4% | -1.7% |
| Nondurable goods manufacturing | 4,400 | 4,400 | 5.6% | 0.0% |
| Wholesale trade | 2,300 | 2,300 | 2.9% | 0.0% |
| Retail trade | 6,600 | 6,800 | 8.6% | 3.0% |
| Transporation, warehousing and utilities | 1,300 | 1,300 | 1.6% | 0.0% |
| Information | 800 | 800 | 1.0% | 0.0% |
| Financial activities | 2,800 | 2,700 | 3.4% | -3.6% |
| Professional and business services | 6,000 | 6,200 | 7.8% | 3.3% |
| Private health and education services | 12,100 | 12,600 | 15.9% | 4.1% |
| Leisure and hospitality | 8,500 | 9,000 | 11.4% | 5.9% |
| Other services | 2,600 | 2,600 | 3.3% | 0.0% |
| Total private employment | 56,800 | 58,100 | 73.4% | 2.3% |
| Government | 24,500 | 21,100 | 26.6% | -13.9% |
| Total nonfarm employment | 81,300 | 79,200 | 100.0% | -2.6% |
Source: U.S. Bureau of Labor Statistics
Within the private sector between August 2024 and August 2025, Bloomington witnessed a pullback in employment in durable goods manufacturing (-1.7%) and financial activities (-3.6%). This matched statewide reduction in these two industries of an identical -1.7% in durable goods manufacturing and a more dramatic -2.9% in financial activities linked to a general nationwide economic slowdown.24,25 Resurgent commercial activity in Bloomington matched an impressive 3.3% growth in professional and business services employment. Steady growth in demand for health care as the population ages produced 4.1% growth in private health and education services employment. This exceeded state growth of 3.2%.26 Regional employment growth was strongest in leisure and hospitality with 5.9% expansion in employment. Higher student enrollments, football success, the total solar eclipse and the region’s rising popularity as a tourist destination made 2025 a good year for hotels and restaurants. Short-term rental bookings grew by 27% in Monroe County in 2024 and that growth continued in 2025.27
Low wages and expensive housing are historical barriers to economic development in Bloomington. Lack of high-paying jobs motivate Indiana University students to leave the region upon graduation, and a shortage of affordable housing makes it difficult to gain traction in recruiting and retaining such talent. The compounded impact of these two challenges is best illustrated in Table 3 by comparing across communities the number of hours an average resident must work to pay the average listing price of a home.28 Divide average house listing price by average hourly earnings to get this number. In August 2025, the average worker in the Bloomington metropolitan area earned 11.9% less than the average Hoosier for an hour of work. The average house in Bloomington listed at a price 18.1% higher than the average house in Indiana. The August 2025 data implies that the average Bloomington metropolitan area resident must work 34.1% more days of their life than the average Hoosier to purchase their house. This is up from 21.3% if the August 2024 data is used. Worrisome shrinkage in average hourly earnings combined with no gain in housing affordability meant Bloomington’s biggest barrier to economic growth got significantly stronger in 2025.
Table 3: Bloomington metropolitan area comparative housing affordability
| Average hourly earnings August 2024 | Average hourly earnings August 2025 | Average house listing price August 2024 | Average house listing price August 2025 | Hours to buy a house August 2024 | Hours to buy a house August 2025 | Hours to buy a house growth 2024-2025 | |
|---|---|---|---|---|---|---|---|
| Bloomington | $30.28 | $28.31 | $451,204 | $451,370 | 14,901 | 15,944 | 7.0% |
| West Lafayette | $27.74 | $27.81 | $396,629 | $418,717 | 14,298 | 15,056 | 5.3% |
| Indianapolis | $31.34 | $33.44 | $428,840 | $418,337 | 13,683 | 12,510 | -8.6% |
| Indiana | $30.59 | $32.15 | $375,641 | $382,180 | 12,280 | 11,887 | -3.2% |
Sources: U.S. Bureau of Labor Statistics, Realtor.com
Economic difficulties encountered by the Bloomington region in 2025 will continue in 2026. Tightness in Indiana University finances will persist as operations adjust to less public support and a freeze on tuition increases. National economic anxiety will keep state and regional economic growth below its potential. Bloomington’s recent bump in commercial activity, though, will provide momentum that diversifies sources of economic expansion. Whereas the nation is expected to grow 1.8% and the state 1.0% in 2026, the Bloomington metropolitan area is expected to grow between zero and 0.5%. National and state unemployment are expected to increase to 4.4% and 4.8%, respectively. Trends suggest a rise in unemployment to 4.0% in Bloomington. The region can exceed these expectations if there is better-than-expected recruitment of new businesses to the region in 2026. Slower-than-desired growth could place downward pressure on housing prices, but it also does the same for hourly wages.
Notes
- U.S. Bureau of Economic Analysis via FRED. 2025. Total real gross domestic product for Bloomington, IN (MSA) and Real gross domestic product: All industry total in Indiana. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. Average hourly earnings of all employees: Total private in Bloomington, IN (MSA). Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. All employees: Total nonfarm in Bloomington (MSA). Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. Civilian labor force in Bloomington, IN (MSA). Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. Average hourly earnings of all employees: Total private in Indiana. Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. All employees: Total nonfarm in Indiana. Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. Civilian labor force in Indiana. Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- Crockett, Christopher. 2025. See the alarming extent of NIH and NSF funding cuts in 2025. ScienceNews. November 18.
- Mazurek, Marek. 2025. How are Indiana’s colleges and universities dealing with state funding cuts? Inside Indiana Business. June 3.
- Indiana University. 2025. IU proposing flat in-state tuition, budget reductions. IU Today. May 29.
- Indiana University. 2025. IU to expand staff hiring review process to prioritize strategic investments. IU Today. July 21.
- U.S. Bureau of Labor Statistics via FRED. 2025. Average hourly earnings of all employees: Total private in Lafayette-West Lafayette, IN (MSA). Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. All employees: Total nonfarm in Lafayette-West Lafayette (MSA). Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. Civilian labor force in Lafayette-West Lafayette, IN (MSA). Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. Unemployment rate in Bloomington, IN (MSA). Smoothed seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. Unemployment rate in Indiana. Seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. Unemployment rate. Seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics. 2025. Number of establishments in private total, all industries for all establishment sizes in Monroe County, Indiana, NSA. Series ID ENU1810520510. Quarterly Census of Employment and Wages.
- U.S. Bureau of Labor Statistics. 2025. Number of establishments in private total, all industries for all establishment sizes in Indiana - statewide, NSA. Series ID ENU1800020510. Quarterly Census of Employment and Wages. Private establishments in Indiana grew from 186,380 in 2024 Q1 to 191,705 in 2025 Q1, or 2.8%.
- U.S. Bureau of Labor Statistics. 2025. Number of establishments in private total, all industries for all establishment sizes in U.S. total, NSA. Series ID ENUUS00020510. Quarterly Census of Employment and Wages. Private establishments in the U.S. grew from 11,602,004 in 2024 Q1 to 11,835,029 in 2025 Q1, or 2%.
- Ladwig, Boris. 2025. ’Wonderful opportunity’: City breaks ground on $71 million Bloomington Convention Center. The Herald-Times. June 4.
- Fernandez, John. 2025. From legacy to launch pad, Innovation Week matters for Bloomington’s future. The Herald-Times. September 26.
- Ladwig, Boris. 2025. Pharmaceutial firm plans to invest hundreds of millions in southern Indiana. The Herald-Times. August 25.
- U.S. Bureau of Labor Statistics via FRED. 2025. All employees: Manufacturing: Durable goods in Indiana. Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. All employees: Financial activities in Indiana. Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- U.S. Bureau of Labor Statistics via FRED. 2025. All employees: Education and health services: Private education and health services in Indiana. Not seasonally adjusted. Federal Reserve Bank of St. Louis.
- Convention and Visitors Bureau of Monroe County. 2025. 2024 Community Tourism Report.
- Average hourly earnings and average listing price for housing inventory for Indiana and the Bloomington, Lafayette-West Lafayette and Indianapolis-Carmel-Greenwood metropolitan areas come from the Federal Reserve Bank of St. Louis FRED database. Average hourly earnings for the metropolitan statistical areas (MSAs) come to FRED from the U.S. Bureau of Labor Statistics. Average listing price for housing inventory for the larger core-based statistical areas (CBSAs) (a geographic area larger than the MSA or MSAs that anchor it) comes from Realtor.com.
