A federal report on economic activity shows Iowa’s gross domestic product or GDP fell just 6.1% in the first three months of the year. The GDP fell in 39 states, but Nebraska and Iowa tied for the biggest drop.
“We started growing more slowly than the U.S. in 2018 and if you go back to the start of the pandemic, we’ve not added any jobs,” Iowa State University economist Peter Orazem said, “so I don’t think Iowa has been doing particularly well not in just the last quarter, but the last seven years.”
In January of 2020, there were 1,704,900 people working in Iowa. That compares to the latest figures which show 1,669,100 people are in the Iowa workforce. “And Iowa goes into the pandemic as one of the older labor forces in the country,” Orazem said, “and so one of the problems that Iowa has faced since the pandemic recovery has been we simply don’t have enough workers to fill jobs, and atypically compared to other states.”
Iowa State University ag economist Chad Hart said the feed grains side of Iowa’s agricultural sector is struggling right now, which has had an impact on ag-related manufacturing. “We think of Deere. We think of Kinze,” Hart said. “…We’ve seen the layoffs over the past year with those two big giants, along with a lot of other smaller firms doing that.”
The agricultural sector of Iowa’s economy took a hit “a few years ago,” according to Hart, and then farm income dropped about 4% again in 2024.
“When we think about agriculture here in Iowa, it impacts all other sectors as well,” Hart said. “…When you think about what’s the biggest thing on the real estate side, that’s farm values…The crop insurance industry is a big industry here and so when you think about, ‘Ag slows down,’ all these other industries related to that slow down as well.”
The two ISU economists made their comments during a recent appearance on Iowa Press on Iowa PBS. Last week, Governor Reynolds said the recent drop in Iowa’s GDP is linked to declines in Iowa’s ag sector, plus challenges in the state’s financial services and insurance industries. Iowa’s insurance industry accounts for about 11% of the state’s GDP.
