Iowa's sinking GDP linked to long-term trends, economists warn
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Iowa's recent economic struggles aren't just a blip, but part of a yearslong slide fueled by workforce shortages, ag volatility and demographic headwinds, two economists said in a new episode of Iowa Press.
Why it matters: Iowa's 6.1% GDP drop in Q1 — adjusted for inflation — raises red flags about the state's ability to attract and retain talent, support new business growth and compete in a shifting national economy.
Driving the news: Iowa and Nebraska experienced the most significant real GDP declines in the first three months of 2025 compared to the same period in 2024, per a report from the U.S. Commerce Department's Bureau of Economic Analysis (BEA). In total, 39 states showed a decline.
- A separate report from WalletHub ranks Iowa as the state with the worst economy.
State of play: Iowa's economy has not done well compared to other states for years, starting with slower growth in 2018, Iowa State University economics professor Peter Orazem told Iowa Press.
- The state's ag sector took a step back last year, and the latest GPD report is the result, Chad Hart, also an ISU economics professor, said on the show.
What they're saying: High crop yields have outpaced demand, lowering prices and dragging related industries like ag manufacturing down, Hart said.
- Iowa's hardships are more severe than those of other states because of an aging workforce and decreased immigration, Orazem said.
- "Atypically, we rely on immigrants to help shore up our relatively slow population growth, and I think the labor market lack of workers has been one of the reasons why Iowa has performed relatively poorly over the last six years," Orazem said.
👉 Zoom in: Politicians are pointing fingers, with Iowa GOP Chair Jeff Kaufmann characterizing the WalletHub report as based on "old data" that reflects former President Biden's neglect of the agriculture and energy industries.
- Iowa Democratic Party Chair Rita Hart blames President Trump's ongoing "tariff scheme" and a growing agricultural trade deficit.
What's next: BEA's Q2 report will be released on Sept. 26.