IU business experts discuss factors in 2027 economy at Futurecast

KOKOMO, Ind. - How will artificial intelligence (AI) impact the economy, now and into the future?

This was one of many topics discussed by Indiana University Kelley School of Business experts at the annual Futurecast 2027 economic outlook event Tuesday at Indiana University Kokomo. Moderated by IU Kokomo School of Business Dean Chittibabu Govindarajalu, panelists answered questions about the local, state, national, and global economies, and offered insights into what to expect in 2027.

Panelists included Kyle Anderson, clinical assistant professor of business economics; Dmitriy Chulkov, professor of business analytics and economics; Bob Hickman, executive vice president and chief banking and credit officer of Community First Bank; Carol Rogers, director of the Indiana Business Research Center; and Jared Wilson, clinical associate professor of finance.

"I think we're going to see continued growth in 2027, but perhaps at a slower rate," Anderson said. "We're really seeing in spite of some significant headwinds, economic growth, we're seeing low unemployment, and last week's jobs report was strong. It's an unusual economy where we hear a lot about inflation, which is clearly a factor that is impacting both economic growth and our daily lives, but by most traditional metrics, this economy is performing OK."

He added that while inflation remains elevated, it's under control and not spiraling.

"Now it's elevated, creeping up and down, and largely a function of the energy crisis," he said.

Chulkov said recent statistics show inflation remains high, but lower than it was two years ago.

"Overall, the past year hasn't been as bad as you'd expect," he said. "Overall, I think we can be cautiously optimistic."

Wilson anticipates an additional interest rate increase in December 2026 and one or two additional increases in 2027, which would increase the cost of borrowing.

Rogers said despite inflation, consumer spending has remained strong.

Workforce challenges are likely to have the largest impact on economic growth, Hickman said, adding that workforce needs continue to evolve.

"If you asked me two years ago, the labor shortage was probably the most significant issue," he said. "Now the issues are really more skills gap and technical. The schools have done a good job locally in dealing with some of the skills gap. The challenge is going to be to get the right technical skills to fill the jobs we have as those are evolving."

Rogers said she hopes to return next year with news of increased migration to Indiana, a sign of the state's economic strength. Education at all levels is key to attracting new residents.

"The challenge we have to attract people is not just good jobs, but good education, and a state that supports universal pre-K," she said. "Universal pre-K would really help Indiana in terms of attracting families from other states and help families in Indiana afford to work. Childcare is outrageously expensive."

Panelists also discussed how AI's potential impact on the economy, including concerns that the technology could reduce entry level job opportunities for those entering the workforce.

Chulkov said many companies are investing in AI but are finding it difficult to generate financial returns, with only one in 20 projects proving profitable.

"The small businesses are where we are going to see the biggest impact," he said, noting that entrepreneurs can use AI for tasks such as accounting and marketing. "With larger companies it's harder to demonstrate gains, thinking in the short term. In the longer term it may change how they organize."

With students from the Kokomo CEO program in attendance, Anderson encouraged them to prepare for changes throughout their careers.

"What are the skills you are learning to be ready for significant job and economic upheaval, and what is your network if your job is eliminated?" he said. "There will be great opportunities moving forward, but they may require skills our workforce doesn't have. The people who will be most successful will be those who develop those skills. You have to be out there firing your shot."

Govindarajalu recalled a message shared by a business faculty member during new student orientation: AI is an amplifier, not a replacement for foundational knowledge and skills.

"If you have knowledge, it helps amplify that knowledge, but if you don't have knowledge, it helps to amplify that too," he said. "You have to be careful about how you use AI and be concerned about learning the subject matter."

Other economic projections shared during Futurecast included:

• The U.S. real gross domestic product (GDP) is forecast to grow 2.6 percent in 2027, supported by household spending and continued business investment.
• Nationally, unemployment is expected to dip below 4 percent.
• Personal consumption expenditures (PCE) inflation is expected to remain between 2 and 3 percent, with tariffs and energy costs keeping pressure on prices.
• In Indiana, average hourly earnings rose 3.9 percent, compared to 3.1 percent nationally. The unemployment rate declined from 3.8 percent to 3.6 percent, and growth in higher-paying industries is expected to help narrow the wage gap.
• Indiana's real economic activity is forecast to grow 2.8 percent in 2027, outpacing the national projection of 2.6 percent. Unemployment is expected to fall to 3.1 percent.
• Life sciences remain a major growth driver, supported by $1 billion in state tax credits for the BioHeartland initiative.

Education is KEY at Indiana University Kokomo.

IU 2030: Service to Our State and Beyond

Improving the lives of the people and economic vitality of Indiana and beyond through timely education, research, innovation, economic development, community service and engagement.

See our full plan here.