Indiana Economy to Grow 2.8% in 2027
The Indiana University Kelley School of Business forecasts steady expansion while flagging inflation, high interest rates, and AI stock valuation risks.
Updated on Nov. 4, 2026 in Economic Indicators
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The Indiana University Kelley School of Business released its annual economic forecast for 2027 on Wednesday. The outlook projects 2.8% growth in Indiana real economic activity and 2.6% U.S. growth, tempered by concerns over inflation, high interest rates, and possible overvaluation of artificial intelligence stocks.
Why it matters
The forecast is based on a baseline model assuming moderate, steady growth, which gives Indiana residents and businesses a planning benchmark for the year ahead. Indiana's labor supply shrank in 2026, so projected employment and labor force gains will shape hiring conditions across the state.
The forecast projects Indiana real economic activity to grow 2.8% in 2027, with construction up 4.6%, durable goods manufacturing up 5.6%, and employment up 0.5%, against a U.S. GDP growth rate of 3.4% in the third quarter of 2026. Projections are based on a baseline model, and the effects of inflation, interest rates, and AI stock valuations are not quantified.
The players
Indiana University Kelley School of Business
The business school at Indiana University, based in Bloomington, is a longstanding academic institution that produces regional and national economic research.
Indiana Business Research Center
The research center within the Kelley School produces detailed state-level economic outlooks used by policymakers and business leaders across Indiana.
The details
Released Wednesday, the forecast projects U.S. economic growth of 2.6% in 2027 and an unemployment rate dipping below 4%, with inflation persisting between 2% and 3%. The outlook also cites $1 billion in tax credits allocated for the BioHeartland initiative and projects Indiana professional and business services growth of 3%.
Timeline
2026 (full year): Indiana's labor supply shrank during the year.
Third quarter 2026: U.S. GDP grew 3.4%.
November 4, 2026: IU Kelley School released its 2027 economic forecast.
2027: Projected U.S. and Indiana economic growth and unemployment decline.
December 2026: A detailed 2027 outlook report is slated for online publication.
Market Dynamics
The 2027 forecast extends the Indiana Business Research Center's annual state-level outlook, which projects Indiana's growth against national trends. Its baseline model assumes moderate, steady expansion, a framework that tracks how state economic activity moves relative to U.S. GDP and inflation.
Projected inflation between 2% and 3% and interest rates that remain high mean household budgets are likely to feel continued cost pressure in 2027. A projected unemployment rate below 4% nationally and modest Indiana employment growth of 0.5% suggest job conditions should remain stable rather than weaken.
The takeaway
A baseline forecast of steady growth is only as reliable as the assumptions behind it, so readers should watch inflation, interest rates, and AI-driven stock valuations as the year unfolds. Indiana's shrinking labor supply makes the projected job gains a key measure to track.
What happens next
The Indiana Business Research Center is expected to publish its detailed 2027 outlook report online in December 2026.
Further reading
For more on the state's measures of growth and employment, see Economic Indicators coverage.
Source note: This article includes information reported by Fox 59.
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