Northwest Indiana forecast 2026

Anthony B. Sindone

Visiting Clinical Associate Professor of Economic Development, School of Business and Economics, Indiana University Northwest

Northwest Indiana, or Economic Growth Region 1 (EGR 1), is a seven-county region consisting of Lake, Porter, LaPorte, Newton, Pulaski, Jasper and Starke counties. The people residing in this area often simply refer to it as “The Region.” The Northwest Indiana Forum, an economic development organization that acts as the regional voice for the business community, has coined a phrase that the region is in the “middle of everywhere.”¹

The region has experienced moderate but steady growth in gross regional product (GRP²) and labor markets over the past five years, with 2024 reflecting its strongest economic position in decades. Forecasts indicate these trends will continue, supporting a strong and diversified regional economy for the next five years.

Since 2020, GRP in the region grew from an estimated $36.4 billion to $50.1 billion in 2023 and an estimated $51 billion in 2024, averaging approximately 6.6% annual growth. The people of the region have strived to recover from several major historical economic events, including the 2008-2009 Great Recession and the COVID-19 pandemic.

Figure 1 reflects the region’s nominal GRP, meaning these figures are not adjusted for inflation. Adjusting for inflation requires the use of a GDP deflator.³ We simply divide the nominal figure by the deflator to obtain a “real” number.

Figure 1: Nominal gross regional product for Northwest Indiana

Note: Values are in billions of U.S. dollars.
Source: U.S. Bureau of Economic Analysis

For example, the nominal GRP for EGR 1 was $50.1 billion in 2023 and $51 billion in 2024. After using a deflator, real GRP for EGR 1 was approximately $40.9 billion in 2023 and $40.7 billion in 2024.⁴

Between 2020 and 2023, nominal GRP across the seven counties increased approximately 37.6%, reversing the pandemic downturn. Lake and Porter counties contributed more than 80% of total output, largely from manufacturing, logistics and health care. Per capita GRP grew by 37% over the same period (see Figure 2).

Figure 2: Per capita GRP for Northwest Indiana

Source: U.S. Bureau of Economic Analysis and U.S. Census Bureau annual population estimates for EGR 1

Table 1 shows a breakdown of nominal (or current dollar) GRP generated from each of the seven counties from 2019 through 2023. Table 2 shows real GRP generated from each county, with the appropriate deflators listed.

Table 2: Real GRP by county in EGR 1 ($ thousands)

Note: Values are in thousands of U.S. dollars.
Source: U.S. Bureau of Economic Analysis and FRED GDP implicit price deflator: https://fred.stlouisfed.org/series/GDPDEF#

Five-year GRP trend analysis

• 2020: Pandemic-related contraction of –7.6% in the region (nominal).
• 2021 and 2022: Broad recovery across manufacturing and warehousing, led by U.S. Steel, Urschel Labs and logistics firms in Porter County.
• 2023: Inflationary pressure diluted gains, but real output continued to rise.
• 2024 and 2025 forecast: Projected annual growth between 2% and 4% amid stable industrial production and expanding service markets.

Northwest Indiana’s industrial composition in 2025 reflects a continuing transition from heavy manufacturing toward a diversified, service- and logistics-driven economy. The region retains a strong industrial base while also rapidly expanding in professional services, health care and warehousing.

Table 3 shows employment in the major industry sectors in the region, along with their location quotients and average annual wages for the first quarter of 2025.

Although the manufacturing sector has a higher relative employment concentration in Northwest Indiana, the largest sector by employment level for the past 10 years has been health care and social assistance. This sector employs 51,582 workers (16.3% of jobs). With an average annual wage of $59,956, the health care sector contributes 16.1% of total wages in Northwest Indiana. Manufacturing remains an important sector employing 44,784 workers  (14.2% of jobs). With an average annual wage of $95,784, the manufacturing sector contributes 22.3% of total wages in the region.

The next two largest sectors in employment are retail trade and accommodation and food services, employing 37,000 and 32,381 workers, respectively. These two sectors have also provided strong job growth over the last few decades, but with significantly lower-than-average annual wages of $36,296 and $23,608, respectively.

While the level and concentration of employment by sector reveal much about the current industry composition of Northwest Indiana, they are a product of the past and a reflection of the competitive advantages held by the region over the last few decades. To understand the direction Northwest Indiana is moving, and ultimately its potential future economic prosperity, we need a more forward-looking metric to assess our competitive advantages as they grow and change.

Growth and change as a competitive advantage

We can identify the competitive advantage a region might have by employing an employment shift-share analysis. In such an analysis, the change in employment in a geographic region for a particular industry or sector i over a given period is decomposed into three shift-share effects:

Shift-share decomposition based on the classical Dunn (1960s)⁵ method:

Change in employment = National growth effect + Industry mix effect + Regional shift effect

Table 4 provides the results of an employment shift-share analysis for all sectors in Northwest Indiana over the last five years. These results highlight the sectors experiencing higher-than-expected job growth, or those in which Northwest Indiana has a competitive advantage.

Manufacturing has historically been considered the primary driver of the economy of Northwest Indiana and as a result, it has been seen as an area of competitive advantage. However, we see that over the past five years, the regional share effect of manufacturing has declined by 1,900. This means that Northwest Indiana lost 1,900 more jobs than we would have expected controlling for national manufacturing sector employment trends. The manufacturing sector is still important in Northwest Indiana, given it accounts for more than 22% of wage income in the region.

Looking at Table 4, the largest total net job creator sectors are transportation and warehousing and health care and social assistance. These two sectors added 5,300 and 5,800 jobs, respectively. A respectable third competitive sector is professional and technical services, adding 1,700 jobs over the past five years, followed by construction, which added 1,500 jobs during the same period.

Regional summary (2020-2025)

• Total employment gain (EGR 1): +14,100 jobs (+5.8%)
• U.S. total employment gain: +6.1%
• Local share decomposition:
  • National growth effect: +10,700 jobs
  • Industry mix effect: +900 jobs
  • Regional shift (competitiveness): +2,500 jobs

EGR 1’s industry mix contributed positively to growth due to logistics and health services, but regional competitiveness was uneven — strong in Jasper and Porter counties, weak in Newton and Starke counties (due to declining retail and manufacturing bases).

Summary of competitive sectors

• Logistics, warehousing and health care are driving regional job growth relative to national trends.
• Manufacturing continues a mild decline, but remains the single largest employment base.
• Transportation and warehousing, as well as health care and social assistance, are continuing to exert their influence on the competitive advantages of the region.
• Construction and professional services are steady contributors, diversifying beyond heavy industry reliance.
• Outer rural counties show limited employment traction due to agricultural mechanization and declining retail employment.

Key industry trends

• Manufacturing still produces roughly one-quarter of the region’s total wage income, but shows slowing employment competitiveness as automation and efficiency gains offset worker demand.
• The transportation and warehousing sector leads private-sector job creation due to new distribution centers and cold storage facilities, leveraging proximity to Chicago’s supply chain.  

Future and forecast for Northwest Indiana

Looking ahead to 2026, we see that Northwest Indiana is in a strong position to continue its steady growth. This reverses the past trend of declines we have seen during the past few decades. Table 5 provides a forecast of key economic variables for Northwest Indiana in 2026.

Strategic outlook

Northwest Indiana’s economy is projected to continue diversifying through 2030, with steady growth in logistics, health care and technology-related services. Manufacturing output is expected to remain steady but will account for a smaller share of total GDP (declining from 23% to approximately 21% by 2030). The region’s proximity to Chicago, major ports and interstate corridors positions it for continued growth in advanced logistics, renewable energy components and digital infrastructure developments.

Final thoughts

The economy of Northwest Indiana can be described as relatively diverse with manufacturing, health care and logistics leading the way. Going forward, I see emerging trends in technology, artificial intelligence and quantum computing on the horizon. The evidence is clear. All one has to do is look at the emergence of data centers, the quantum hub and the growth in population.

There are a few items, though, that are holding the region’s economy back from strong dynamic growth that should result from these emerging industries:

• While there is a growing inventory of housing in NWI, there is an acute shortage of affordable housing available to meet the needs of the people who live there.
• Affordable child care is essential to attract the skilled workforce the region needs to engage in the emerging industries I see on the horizon.

Reimagining the education system is critical. A system must be created that encourages a love of learning new things. We can look at the past and attempt to extrapolate what happened to forecast the future. The reality is that we do not know the future. But we know it will be different than today. The future workforce needs to develop an ability to adapt quickly to new technologies and new ways of interacting with their work and society.