Richmond forecast 2026

Oi Lin Cheung, Ph.D.

Director of the Business and Economic Research Center and Professor of Finance, Indiana University East

This article examines the recent performance of key economic indicators and the 2026 economic outlook for the Richmond region, a region comprised of seven east-central Indiana counties: Fayette, Franklin, Henry, Randolph, Rush, Union and Wayne.

As of the first quarter of 2025, manufacturing remains the region’s leading employment sector, providing 13,582 jobs (see Table 1). While this concentration is a long-standing characteristic of the region's economy, its stability is closely monitored. Manufacturing is followed by key service-based sectors: health care and social services (8,155 jobs), retail trade (7,699 jobs) and accommodation and food services (4,713 jobs).

According to the most recent data available (2023) from the U.S. Bureau of Economic Analysis (BEA),¹ Wayne County leads the region in aggregate economic measures. It accounted for approximately 31.6% of the region’s total population (209,550 people) and generated a commensurate 31.5% of the region’s total personal income ($11 billion). Following Wayne County, Henry County housed nearly one-quarter (23.3%) of the population and earned more than one-fifth (21.5%) of the total personal income.

While Wayne and Henry counties possess the largest aggregate economies, measures of individual economic well-being show localized strength elsewhere. Rush County ($58,058) and Franklin County ($57,550) had the highest per capita personal income (PCPI) in the region. Importantly, these figures were roughly 94% of Indiana state PCPI ($61,243) and exceeded 82% of the national PCPI ($69,810), reflecting concentrated high-wage employment or significant commuter income in these smaller counties. All counties experienced recent growth in their PCPI, ranging from 2.5% (Henry County) to 5.1% (Fayette County).

Labor market

The region's average monthly labor force for January to August increased by 0.63% from the previous year, totaling 100,328 people in 2025 (see Figure 1). Four counties in the region saw growth of more than 1%: Union County (+1.90% to 4,154 people), Henry County (+1.87% to 22,424 people), Franklin County (+1.61% to 12,014 people) and Rush County (+1.33% to 8,371 people). The remaining three counties either held steady (+0.27% in Randolph County and –0.23% in Fayette County) or saw a decline of more than half a percent (–0.55% in Wayne County).

Over the same eight-month period in 2025, the region's overall average monthly unemployment rate was 3.89%, a decline of 0.35 percentage points from the previous year. Significantly, all counties reported lower average unemployment rates in 2025.² While Union County had the lowest average unemployment rate (2.80%) and Fayette County had the highest (4.34%), the rest of the region's average monthly unemployment rates ranged from 3.50% to 4.10%.

Figure 1: Richmond region labor force and unemployment rate

Note: Data are not seasonally adjusted. August 2025 data are preliminary.
Source: Local Area Unemployment Statistics (LAUS) from the U.S. Bureau of Labor Statistics

Jobs and wages

The region cut 494 jobs in the private sector in 2025 Q1 (see Table 1). These losses were substantial in sectors like transportation and warehousing (-1,046 jobs), construction (-465 jobs) and other services (-218 jobs). Significant reductions also occurred across several other sectors, including retail trade (-195 jobs), health care and social services (-194 jobs), administrative, support, waste management and remediation services (-133 jobs), utilities (-130 jobs), management of companies and enterprises (-118 jobs) and educational services (-117 jobs). However, the region’s key manufacturing sector demonstrated foundational strength by adding 668 new jobs, followed by 85 new jobs in accommodation and food services, and smaller gains in real estate and rental and leasing (+30 jobs), wholesale trade (+22 jobs), professional, scientific and technical services (+22 jobs) and finance and insurance (+16 jobs). These gains directly offset a substantial portion of the region’s job losses.

The region saw an average 5.9% increase in private sector weekly wages at the beginning of 2025 (see Table 2). The labor market in the region is extremely tight, as evidenced by a low unemployment rate of 3.89% and rapid, inflationary weekly wage growth of 5.9%, giving workers significant leverage despite a small net job loss. Management of companies and enterprises experienced the highest pay increase of 43.1%, while utilities suffered the highest pay drop of 30.3%. Only three other sectors received lower weekly wages than the year prior: arts, entertainment and recreation (-12.5%), transportation and warehousing (-3.9%) and accommodation and food services (-2.5%). The remaining sectors received higher weekly wages, with increases ranging from 2.9% (in retail trade) to 17.7% (in finance and insurance).  

Housing market

Housing market performance, as of September 1, 2025, was highly localized, showcasing a diverging market trend across the region (see Table 3). Specifically, counties like Franklin and Randolph are experiencing classic market expansions (supply surge, sales boom and stable prices), while Rush County is showing clear signs of a significant market correction (large declines in price and sales). Franklin County and Randolph County have been experiencing a supply surge (inventory nearly doubled year over year (YoY)), a boom in sales activity (very high YoY growth in closed and pending sales), yet stable median sale prices (0% and +8% YoY, respectively). These are high-growth and quickly expanding markets. Henry County shows strong price appreciation (+28% YoY) and high sales growth (+28% YoY), but also a significant slowdown in market speed (median days on market up +136% YoY), suggesting it's a rapidly appreciating market that's more complex and potentially slowing.

Rush County appears to be a significantly cooling market, with the largest increase in inventory (+114% YoY) and large declines in median sale price (-33% YoY), closed sales (-7% YoY) and the sale price-to-listing price ratio (-5% YoY). Wayne County exhibits moderate price appreciation (+13% YoY), a slowdown in market speed (median days on market up +52% YoY) and a decline in new listings (-18% YoY), which could result in tighter inventory in the future. Fayette County is a fast, supply-constrained market hitting price resistance. Buyer demand is intense (median days on market down 70% to 8 days), but the median sale price is flat (0% YoY). This speed is unsustainable given future inventory risk (new listings down 23% YoY). Union County is a highly volatile, low-volume market. Minimal activity (an average inventory of 1.6 units, with 0 sales in August (reported as a month to September 1)) easily skews metrics. A slow pace is evident as months of inventory spiked 215% to 6.3 months, defined by scarcity and high volatility.

Outlook

The IU East Regional Business Confidence Index (IUERBCI) increased by 4% since last year (see Table 4), primarily driven by strong current performance (+8.5% Present Situation Index). While the Expectation Index grew more modestly (+0.7%), the overall result suggests that businesses had a significantly better year in 2025 and are optimistic, but moderately cautious, about 2026.

Nearly half (45.3%) of the surveyed businesses increased their production/business activities in 2025, with increases of 23.1% or 22.2% (significantly or slightly, respectively). About a third (31.6%) maintained their activity at about the same level as the previous year. Most (90.6%) businesses either maintained (62.1%) or expanded (28.5%; 5.2% significantly and 23.3% slightly) their employment levels in 2025. Less than one-tenth (6.1%, which is 3.5% slightly plus 2.6% significantly) of businesses reduced capital investment, indicating a commitment to future growth for the majority. More than one-third (37.4%) increased their investment. More than four-fifths (83.4%) of the businesses experienced a rise in their costs of doing business, with a slight increase of less than 5% (44.3%) or a significant increase of more than 5% (39.1%). As reflected in the survey, 2025 ended with 35.7% of businesses (9.6% significantly higher and 26.1% slightly higher) increasing their profitability, while 28.7% maintained their prior-year profitability.

In their planning for 2026 operations, 91.5% (18.6% significantly, 39.8% slightly and 33.1% about the same) of the surveyed businesses expected to increase or maintain their 2025 production/business activity level. Only 1.7% of the businesses surveyed planned to reduce their employment level slightly by less than 5% (no businesses planned a significant decrease); the rest planned to expand (30.1%, which is 3.4% significantly plus 26.7% slightly) or maintain (68.1%) their current level. More than 90% (96.5%) of the surveyed businesses planned to maintain (63.2%) or increase (33.3%; 6.8% significantly and 26.5% slightly) their capital investments in 2026. Of the surveyed companies, 44.8% (10.3% significantly plus 34.5% slightly) expected an increase in profitability, despite more than four-fifths (83.5%, 20.9% significantly plus 62.6% slightly) anticipating an increase in the cost of doing business.

More than a quarter (28.6%) of the surveyed businesses anticipated the same business and economic conditions in 2026 as in 2025. Nearly half (48.8%) were optimistic (strongly 10.1% plus moderately 38.7%), while about a quarter (22.7%) were pessimistic (moderately 18.5% plus strongly 4.2%) about the 2026 conditions.

At the most recent Federal Open Market Committee (FOMC) meeting on September 17, 2025, the Federal Reserve Board (Fed) forecasted the following for the U.S.:³

• Real GDP growth rate median: 1.6% and 1.8% for 2025 and 2026, respectively (both are 0.2% better than the June projections for 2025 and 2026).
• Unemployment rate median: 4.5% and 4.4% for 2025 and 2026, respectively (the same as and 0.1% better than their corresponding June projections).
• Inflation rate median: 3.1% for 2025 and 2.6% for 2026 (the same as and 0.2% worse than their corresponding June projections).

In October 2025, the International Monetary Fund (IMF) projected U.S. real GDP growth of 2.0% and 2.1% for 2025 and 2026, respectively, which is higher than the Fed's projections above. Both projections were up 0.1% from their July projections.⁴

The Conference Board’s October U.S. real GDP forecast was 1.8% for 2025 and 1.5% for 2026. The revisions were primarily driven by significantly upward consumer spending data; however, the overall outlook remains constrained by the negative impact of tariffs and the anticipated effects of recent fiscal policy changes.⁵

Summary

The Richmond region’s economy demonstrated clear resilience amid volatility in the initial quarters of 2025. Despite a net loss of 494 private sector jobs, the core manufacturing sector demonstrated foundational strength, adding 668 jobs. This net job change, coupled with a slight rise in the labor force, resulted in a significantly tighter labor market. This tightness is evident in a sharp decline in the average monthly unemployment rate to 3.89% (January-August 2025) and a substantial 5.9% increase in average private sector weekly wages.

Separately, the housing market presented a highly localized and mixed picture, with several counties experiencing robust expansion while others showed signs of contraction. The 4.0% increase in the IU East Regional Business Confidence Index (IUERBCI) suggests a favorable economic course ahead, supported by strong business commitments to maintain or increase capital investment in 96.5% of surveyed firms. Given this forward-looking investment and the existing labor supply constraints, the labor market is projected to remain exceptionally tight. Consequently, the region’s average monthly unemployment rate for 2026 is forecasted to stabilize at an exceptionally low level in the mid-to-upper range of 3%, with variations across industries and counties, depending on the impacts of the U.S. government shutdown, tariffs and artificial intelligence on businesses’ operations. This projection indicates sustained economic activity, but also highlights the ongoing critical challenge of labor scarcity facing the region's employers.