February 2025
National
The quarterly U.S. forecast of January 2025 was used as the basis for this long-run projection. As shown in the Table below, that forecast showed real GDP growth averaging 2.46% for the period 2024-2027. Employment was expected to rise at a 1.20% rate. The value reflects a return toward long-run trend after recovery from the government mandated economic shutdown precipitated by the COVID-19 pandemic. Over the long-run projection period (2028 to 2045) real GDP growth is below the near-term performance, but slightly higher than our previous projection (August 2024). For employment growth, our long-run projection is far below the short-run forecast, reflecting slower growth in the labor force. It is quite similar to our August projection. The long-run growth rates for both output and employment are in line with our estimate for long-run potential, which depends on assumptions for labor force growth and productivity. We have made no significant changes to these assumptions from those used last August.
Baseline Forecast: Average Annual Percent Change for Selected U.S. Variables
| Variable | 2024-2027 | 2028-2045 |
|---|---|---|
| Real GDP | 2.46% | 2.04% |
| Total Establishment Employment | 1.20% | 0.60% |
| Consumption Deflator | 2.06% | 1.97% |
Indiana
The Indiana long run projection uses our January 2025 short-run forecast as its basis. Over the short-run period (2024-2027) the Indiana economy has only minor residual distortions from the COVID shutdown/restart. By the end of 2027 our forecast has the Indiana economy fully recovered from the 2020 shutdown. The long-run projection thereafter reflects our assumptions about labor force growth and productivity. In our new long-run projections (covering 2028-2045) both assumptions are little changed from our February 2024 projection.
For the projection of industry GSP variables, we used the GSP historical data which covers the period 1997 to 2023. These data now fully incorporate the recent Bureau of Economic Analysis comprehensive revisions. Productivity is defined as the ratio of GSP to total employment in an industry. Projections of productivity together with projected sectoral employment levels are used to calculate GSP.
The average growth rate of total GSP over 2028-2045 is projected to be 2.10% per year. Over the same period total Indiana employment is projected to grow at a 0.53% rate, with employment in manufacturing falling at a 0.62% rate, and in non-manufacturing growing at a 0.71% rate.
Baseline Forecast: Average Annual Percent Change for Selected Indiana Variables
| Variable | 2024-2027 | 2028-2045 |
|---|---|---|
| Gross State Product | 2.45% | 2.10% |
| Total Employment | 1.05% | 0.53% |
| Real Personal Income | 2.07% | 1.68% |