Indiana University’s Kelley School of Business is projecting continued U.S. economic growth in 2027, while warning that the outlook could be disrupted by inflation, energy costs, high interest rates, or a sharp reassessment of stock valuations. Its annual Kelley Futurecast anticipates 2.6% growth, supported by household spending and business investment. A separate October outlook from IU’s Center for Econometric Model Research also points to steady expansion, forecasting average growth of about 2.5% through the end of 2027 while emphasizing that the projection depends on risks remaining manageable.
The national outlook builds on recent strength in consumer spending and business investment in equipment and intellectual property, the university’s econometric center reported. But the center also identified uncertainty around oil prices and Federal Reserve policy. Inflation is another concern: the Bureau of Labor Statistics reported that consumer prices were up 3.7% over the 12 months through September 2026, with energy prices contributing to the increase.
Why Indiana’s economy could outpace the nation in 2027
Indiana’s recent performance has been more subdued. Real economic activity increased 1.2% from the second quarter of 2025 to the same period in 2026, according to Inside Indiana Business, with labor-force shrinkage identified as one constraint on expansion. The Kelley forecast nevertheless expects the state to grow 2% to 3% in 2027, potentially outpacing the national economy. IU’s state forecasting program examines employment, income, and broader economic activity, but its projections remain dependent on assumptions about conditions that are subject to constant change.
Life sciences investment puts Indianapolis ahead
The forecast also points to stronger prospects in the Indianapolis area, where growth is projected to exceed 3%. The university’s metropolitan forecasting program models employment, income, and population across Indiana’s metro areas, offering a regional view that statewide figures can obscure. “We’ve seen over $5 billion in new investment announcements just since Jan. 1 in the Indianapolis region,” Kelley School of Business clinical professor of business economics and public policy, Phil Powell, told Inside Indiana Business. “We also are predicting the Indiana economy to grow a whole half-point faster than the rest of the nation, and we’ll see Indianapolis growing at just over 3%. And all this is driven by a solid life sciences sector,” he added. State economic-development announcements from earlier this year back that up, highlighting Eli Lilly’s planned investment commitments in Indiana, including a new genetic-medicine manufacturing facility in Lebanon, which bring their total capital investments in the state to $21 billion since 2020.
Wage and labor figures cited by Powell highlighted that average hourly earnings for Hoosiers who remained in the labor force rose 3.9%, compared with 3.1% nationally. The Bureau of Labor Statistics reported Indiana’s September 2026 unemployment rate at 3.4%, while the Kelley forecast expects the state rate to remain below 4% in 2027 and projects that unemployment in the Indianapolis area could fall to 2.5%.
Kelley faculty plan to present the outlook in cities around Indiana, while a more detailed report, including projections for additional cities and sectors, is expected in the winter issue of the Indiana Business Review.
