Hey, Iowa: We're not the worst!
Our state gets some not-so-bad economic news, but it still doesn't mask our long-term decline.
Turns out, Iowa may not have had the nation’s worst economy last year.
The numbers crunchers at the US Bureau of Economic Analysis have pumped out new estimates for 2024, and Iowa ranked 27th in the nation for growth in Gross Domestic Product. Not 49th, as the agency estimated earlier.
This is good news. Sort of. Finishing the year in the bottom half of the states is better than being next to last. (Or even dead last, as one private study that took into account a number of factors ranked Iowa a few months ago.)
In baseball terms, Iowa is rather like the San Francisco Giants, but thankfully not the Chicago White Sox. Sure, neither team made the playoffs, but it’s probably better to finish 12 games out of first place than 28.
Still, the complaint about Iowa’s economy has never been about a single year. Instead, it’s mostly centered on the state’s poor long-term performance—especially since Kim Reynolds became the governor and the Republican Party gained full power at the state capital in 2017.
Since then, Iowa’s economic news has been pretty bad.
Real GDP growth has risen, on average, by just 1.5% per year.
Real median household income in Iowa only went up by about 1% per year between 2017 and 2024.
Non-farm jobs in Iowa grew by just 1.5% over seven years. Nationally, jobs grew at a much faster rate over the same period.
Iowa’s labor force participation rate has shrunk since 2017.
The childcare crisis in Iowa that keeps people out of the labor force continues, with little progress being made.
We also lose college-educated young people by the buckets.
In July, Common Sense Institute of Iowa reported the state has seen an especially dramatic loss of college graduates ages 25-29 since 2020. It’s gotten so bad Iowa’s cumulative per capita net outflow in this age group ranked the state fourth worst in the nation in 2024.
Even the federal government’s re-estimate for 2024 GDP is less than it appears.
The size of Iowa’s economy ranked us 32nd in the nation last year, down from 31st the year before. That’s the worst Iowa has finished in the 28 years that the Bureau of Economic Analysis has published these figures. As recently as 2010, we ranked 29th in the nation.
Not great, sure, but better than it is now.
Iowa also lost ground for the second year in a row in 2024. That’s never happened before.
This year has been more of a mixed bag. Iowa’s GDP contracted in the 1st Quarter of 2025 but bounced back in the 2nd Quarter, according to estimates.
Again, these are short-term estimates. Widen your lens, and the longer-term results have been brutal. From 2017 to 2024, Iowa’s economic growth rate ranked 37th in the nation.
We’re even losing to ourselves. Over the last seven years, Iowa’s economy grew at only half the rate it did the previous seven years.
This is hardly what we were promised when Republicans won the trifecta and embarked on an ideological crusade to remake the state.
At the heart of the GOP’s economic crusade was its decision to experiment with a flat income tax.
Somehow, the ruling party thought giving the average millionaire an extra $67,000 a year to play with, while the typical Iowa family only got $600, would juice the state’s economy.
The experiment isn’t going well. Over the past year (August to August) Iowa is just one of four states that actually lost jobs.
Some of this, to be fair, has to do with the ruling party’s national leader. Donald Trump’s trade war is hurting farm country, just like it is consumers across the country. It’s so bad that Sen. Chuck Grassley recently likened the situation to the farm crisis of the 1980s.
All of this is having an impact on the state budget, too.
The numbers crunchers at the Iowa Legislative Services Agency issued a report recently that said state revenues in fiscal year 2025 were about $200 million less than what lawmakers were expecting last spring.
This comes on top of the GOP’s plans to run an operating deficit of $900 million in fiscal year 2026, an installment on what the ruling party anticipates will be five years of deficit spending.
Republican leaders have said these deficits are part of the plan. The idea, apparently, is to hope the state’s budget surplus holds out until that long-awaited economic hey-day arrives.
Theoretically, this is possible, I suppose. But I don’t think regular Iowans like the idea of borrowing from savings for years on end to pay the bills while they wait for an economic miracle.
Besides, surpluses don’t last forever.
In Iowa’s case, that extra cash was built up in large part by federal Covid funding and a post-pandemic revenue boost that lifted every state in the country. Those things won’t happen again. Nor do I think Iowa can continue to stash money into reserve accounts by shortchanging education funding and ignoring other pressing needs like health care and clean water.
I’ve said this before. Iowa needs to make a change—and fast. The ruling party in Des Moines no longer operates on good old Iowa practicality. Ideology and culture wars rule the day, and we’re paying the price.
When Iowa has to breathe a sigh of relief that our economy is not the nation’s worst, then something is wrong. When Iowa ranks 32nd in the nation in economic performance, but 2nd in book bans, then something is wrong.
Is it any wonder young people want to get out of here as soon as they get their college degrees?
The warning signs are flashing. I hope the Iowans who remain in this state are paying attention and change course—soon.
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Ed, has the state released a price tag yet on what vouchers will cost this school year? And I wonder how that compares to their initial estimates?
Is there any limit on the number of school vouchers that will be available in coming years?
And will the state provide any support to farmers, especially small farmers, who may be going broke this year?