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Despite a complex national and global economic landscape, ����ֱ��’s economy will continue to grow in 2025, according to the 60th annual ����ֱ�� Business Economic Outlook, released Monday by the Business Research Division at the Leeds School of Business.

Richard Wobbekind

The forecast, developed by the Business Research Division in collaboration with the State of ����ֱ�� and insights from more than 140 leaders across the business, education and government sectors, projects job growth of 1.2% in 2025. This would mean an additional 36,700 jobs throughout the state, with 10 of ����ֱ��’s 11 major industries expected to add jobs.

Several factors are contributing to ����ֱ��’s growth, including a strong labor market, population expansion and continued investment in key industries. However, after being a leading economy in recent years, ����ֱ��'s economy is in a slowing trend, with more moderate employment and GDP growth on the horizon.

“Following the great financial crisis until 2023, ����ֱ�� was one of the top-performing state economies. More recently we have moved more to the middle of the pack, perhaps suggesting that we are leading in the slowdown as well,” said Richard Wobbekind, senior economist at the Leeds School of Business and faculty director of the Business Research Division.

Slower growth could become the new norm for ����ֱ��, as population growth, particularly from net migration, continues to slow, posing challenges for labor force and job expansion.

Brian Lewandowski

“One of ����ֱ��'s challenges is the supply of labor," said Brian Lewandowski, executive director of the Business Research Division. "Slow net migration coupled with the wave of retirements means that labor shortage will be an ongoing phenomenon in 2025."

����ֱ�� added an estimated 46,800 jobs in 2024, reflecting growth of 1.6% over 2023. Jobs are expected to grow at a more modest pace in 2025, with all industries except information projected to add jobs, led by education and health services, government, and construction.

Here’s a closer look at industries that will likely grow in 2025.

Education and health services: This sector is expected to continue growing in 2025 at 2.3% as the demand for health care services increases with ����ֱ��'s aging population. Challenges in health care include potential increases in uninsured patients due to Medicaid redeterminations. Education will also face difficulties as schools adjust to the evolving needs of online learning and fluctuating enrollment numbers.

Government: Government jobs are projected to increase by 1.3% in 2025, recovering from pandemic-related losses. Local government positions are expected to rise by 2.1%, while state government employment remains flat and federal government jobs see modest growth.

Construction: After a slight decline in 2024, construction is expected to rebound with an increase of 6,000 jobs in 2025. This is largely due to a rise in single-family home permits.

Trade, transportation and utilities: As the largest provider of jobs in ����ֱ��, this sector is projected to grow by 0.3%, adding 1,500 jobs. Factors impacting growth include a slowdown in retail trade, a shift in spending from goods to services and the stabilization of warehouse jobs after pandemic-era spikes.

Financial activities: This sector is expected to grow by 1.4% in 2025, with commercial banking showing strength and commercial real estate improving. The forecast calls for the addition of 2,600 jobs.

Professional and business services: With ����ֱ��’s reputation for innovation and entrepreneurship, this sector is forecast to grow by 1.6%, reaching 303,600 jobs in 2025. Although growth has slowed in recent years, it remains one of the state’s key economic drivers. ����ֱ��’s position as one of the most innovative, educated and entrepreneurial states bodes well for the sector’s future.

Natural resources and mining: Although small in terms of total jobs, this sector contributes significantly to ����ֱ��’s economy. It’s expected to grow by 4.4% in 2025, adding around 1,000 jobs, as modest growth in energy production should boost demand.

����ֱ��’s population

Following rapid expansion during the 2010s, ����ֱ��’s population growth, especially from net migration, is slowing.

The population in 2025 is expected to grow 51,000, following an increase of 43,000 in 2024. Most of this growth is still driven by births, with deaths returning to pre-pandemic levels. Net migration will also contribute to the rise.

Though long-term population growth in ����ֱ�� is expected to slow due to challenges like declining birth rates, an aging population, and increased competition for labor, the state will likely continue to outpace the national average, growing at about twice the national rate.

Trends and challenges

The report highlights several key trends and challenges that will shape ����ֱ��'s economic outlook in 2025:

Regulatory and policy uncertainty. There are several economic uncertainties tied to the policies of the incoming administration. The committee expects President-elect Donald Trump to follow through on his campaign promises, particularly around taxes, tariffs and immigration. Tax cuts could boost the economy in the short term by increasing demand, but the impact depends on their size and how they’re financed. Tariffs may create inflationary pressures, and the new immigration policy could have an impact on the labor force.

Worker shortage: ����ֱ��’s labor force participation rate remains below pre-pandemic levels, with many jobs going unfilled. The state’s labor force participation rate was 62.6% in October 2024, compared to 63.3% in January 2020.

Artificial intelligence: AI is rapidly transforming industries, and ����ֱ�� is taking a leading role in regulating its impact. The ����ֱ�� Artificial Intelligence Act, passed in May 2024, is the first comprehensive state law in the U.S. regarding AI development and deployment. The law, which takes effect in February 2026, aims to prevent algorithmic discrimination in AI systems used for job screening.

Housing: Higher mortgage rates and limited housing supply continue to pose affordability challenges, especially for workforce housing.