Wells
The U.S. Bureau of Economic Analysis just released national data on the nation’s gross domestic product growth during the last quarter of 2025. The country’s growth in Q4 2025 was 1.4%. Increases in consumer spending and investment were offset by the Fall 2025 government shutdown. This report contrasted with the previous quarter, where national GDP growth was 4.4%.
While state GDP growth for Q4 2025 will not be released until April, we know that Indiana’s GDP growth was 5.1% in Q3 2025, which was higher than the national average. The announcement on Feb. 20th from the Supreme Court of the United States on federal tariffs will have a positive impact on Indiana’s manufacturing-dependent economy. Paired with the recent economic analysis that informs an upgraded state revenue forecast, the state economy appears to be in good shape.
This good news is not just a blip — the story of Indiana’s economy over the last 20 years shows steady growth. In fact, state GDP, real income, and employment have all grown steadily, excepting downturns during the Great Recession and the pandemic.
Looking at the per capita income numbers mentioned above, in 2024 Indiana had the 36th lowest real (adjusted for inflation) per capita income in the nation. Our November 2025 Competitiveness Index indicated that Indiana had one of the lowest average weekly wages in the U.S. (Indiana was 43rd lowest in weekly wages to be exact).
Some say that comparison is the thief of joy. We at the Indiana Fiscal Policy Institute disagree — comparison provides needed context. It is important to measure where Indiana stands in relation to our Midwest neighbors and peer states, who we directly compete with for talent and investment.
In our 2025 index, we were the lowest performing state amongst our peers in wages and income. While it is true that cost of living tends to be low in Indiana, this does not offset the fact that Hoosiers consistently earn less and have less purchasing power than citizens in our peer states. This puts us at a competitive disadvantage for the talent that we desperately need.
This is not a new phenomenon. Policy makers in Indiana have discussed our low wages and income for decades. Since former Gov. Mitch Daniels elevated the need to increase the wages of Hoosiers in his 2003 gubernatorial campaign, various leaders have elevated this issue over time, but have yet to crack the code increasing wages.
Gov. Mike Braun has indicated that it is one of his priorities to increase Hoosier wages. This is an important goal. We look forward to his administration unveiling how they intend to achieve this goal. We know that to achieve sustainable wage growth, the solution will need to be holistic.
Education and workforce development policies, economic development policy, and changes to public sector jobs all need to be considered when considering pro-wage growth policies. The Indiana Fiscal Policy Institute will be digging into all these areas in the months to come, to ensure that this important public policy goal is informed by nonpartisan data-driven research.
Stephanie Wells is president of the Indiana Fiscal Policy Institute. She is the founder of Wells Strategy + Solutions, which provides clients with assistance on workforce development, economic development, policy solutions, research, and data analysis, along with logic and data modeling. Previously she was vice president of Workforce Development for the Indiana Manufacturers Association. Send comments to editorial@therepublic.com.
