August 2025
National
The quarterly U.S. forecast of August 2025 was used as the basis for this long-run projection. As shown in the Table below, that forecast showed real GDP growth averaging 1.95% for the period 2025-2028. This value is somewhat reduced by the expected impact of U.S. tariffs. Employment was expected to rise at just a 0.53% rate. Employment growth is held down by both the effects of tariffs and by reduction in immigration. Tariffs also have a positive short-run effect on inflation. Over the long-run projection period (2029 to 2046) real GDP growth is above the near-term performance, and also slightly higher than our previous projection (February 2025). For employment growth, our long-run projection is above the short-run forecast, but is quite similar to our February 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 February. The long-run inflation rate is projected to be close to the Federal Reserve target.
Baseline Forecast: Average Annual Percent Change for Selected U.S. Variables
| Variable | 2025-2028 | 2029-2046 |
|---|---|---|
| Real GDP | 1.95% | 2.10% |
| Total Establishment Employment | 0.53% | 0.60% |
| Consumption Deflator | 2.61% | 1.94% |
Indiana
The Indiana long run projection uses our August 2025 short-run forecast as its basis. Over the short-run period (2025-2028) the Indiana economy, like the national economy, feels negative effects from the impact of higher tariffs. By the end of 2028 these have mostly run their course. The long-run projection thereafter reflects our assumptions about labor force growth and productivity. In our new long-run projections (covering 2029-2046) both assumptions are little changed from our February 2025 projection.
For the projection of industry GSP variables, we used the GSP historical data which covers the period 1997 to 2023. 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 2029-2046 is projected to be 2.17% 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 0.58% rate, and in non-manufacturing growing at a 0.71% rate.
Baseline Forecast: Average Annual Percent Change for Selected Indiana Variables
| Variable | 2025-2028 | 2029-2046 |
|---|---|---|
| Gross State Product | 1.88% | 2.17% |
| Total Employment | 0.32% | 0.53% |
| Real Personal Income | 1.21% | 1.96% |