Indiana Economy: Manufacturing, Agriculture, and Logistics

Indiana is a mid-sized state economy, usually ranked in the upper-middle of U.S. states by GDP — the dollar value of everything a place makes and sells in a year. The Indiana economy is famously manufacturing-heavy: only a few states make a higher share of their output from factories. But agriculture, logistics, life sciences, and education round out the picture.

This is a plain-English tour. For the national picture, see The State of the U.S. Economy and the Economy hub.

How big is the Indiana economy?

For example, recent state GDP for Indiana has run around $475 billion, according to the Bureau of Economic Analysis. Population is roughly 6.9 million, per the U.S. Census Bureau. The Indianapolis metro is the economic center, with Fort Wayne, South Bend, and Evansville anchoring smaller regional hubs.

The biggest industries

Indiana's industry mix tilts heavily toward making things. The main pillars are:

• Manufacturing — Indiana makes more steel than any other state, builds RVs (Elkhart is the RV capital of the world), and produces auto parts, medical devices, and pharmaceuticals.
• Life sciences — Eli Lilly is headquartered in Indianapolis and anchors a large pharma cluster.
• Agriculture — Indiana is a top producer of corn, soybeans, hogs, and eggs.
• Logistics — the state's central location and dense interstate network make it a natural distribution hub; Indianapolis is a major FedEx ground hub.
• Education — Indiana University, Purdue, Notre Dame, and others employ tens of thousands and anchor regional economies.
• Health care — large hospital systems like IU Health are major employers in nearly every metro.

Jobs and wages

Indiana labor data is published by the Indiana Department of Workforce Development, with national-level numbers from the Bureau of Labor Statistics. For example, the Indiana unemployment rate has typically run close to or below the national average, helped by the manufacturing base.

The Indiana minimum wage is tied to the federal floor of $7.25 per hour. Many large Indiana employers pay well above that on their own.

Taxes in Indiana

Indiana has a flat state income tax at one of the lowest rates of any state with an income tax. Counties also charge a small local income tax that varies by county.

The state sales tax rate is 7%, with no general local add-on — so the combined rate is the same almost everywhere in the state. Groceries are not taxed. State tax forms and rules live at the Indiana Department of Revenue. You can read more about how sales tax works in our glossary.

Cost of living

Cost of living in Indiana is typically below the national average. Indianapolis is roughly average for a large metro; smaller cities like Fort Wayne and Evansville are quite affordable. The federal government tracks region-specific Consumer Price Index data through the BLS Midwest region, and HUD publishes Fair Market Rents for every county at HUD User.

Manufacturing concentration

Manufacturing accounts for a far larger share of Indiana's GDP than the national average. That gives the state advantages — high wages for non-college workers, dense supplier networks — and risks. When global auto and machinery cycles turn down, Indiana feels it more sharply than service-heavy states.

The RV and recreational vehicle cluster

Elkhart County in northern Indiana produces the great majority of the recreational vehicles built in the United States. Hundreds of small and mid-sized assemblers and parts suppliers feed a single specialized industry, which means Elkhart's unemployment rate moves up and down with the national RV market more sharply than almost any other county in the country. When interest rates fall and consumer confidence is high, RV plants run extra shifts. When borrowing costs rise, layoffs come quickly.

Indianapolis as a logistics and pharma hub

Indianapolis has quietly become one of the most important inland logistics hubs in the country, helped by its central location and the FedEx ground sorting facility at the airport. The same metro is also home to Eli Lilly's global headquarters, which anchors a meaningful pharmaceutical research and manufacturing cluster. The combination of warehouses, distribution centers, and pharma research means Indianapolis offers a wider range of jobs than most cities its size.

How does the Indiana economy fit into the national picture?

Indiana is the most manufacturing-intensive large state in the country. The combination of low taxes, central location, and a deep supplier base keeps the factory sector competitive. Population growth is modest but steady, with Indianapolis adding most of the new residents.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and the Indiana Department of Revenue for the most current data.