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Is Iowa's economy really the worst?

Photo by Alexander Grey on Unsplash

Iowa Republicans are struggling this week to convince people the state’s economy doesn’t stink.

It’s not going well.

On Monday, WalletHub released a report saying Iowa was the worst state in the country for economic activity. Actually, we were 51^st, when you include the District of Colombia.

Go team!

Normally, Iowa Republicans love these types of surveys and testimonials; that is, when they tout good news. They even go the extra mile sometimes to distort them to try to make their leaders look better.

This week, though, Republicans were caught flat-footed.

Jeff Kaufmann, the state party chair, acknowledged failings in the economy, but blamed them on Joe Biden.

Gov. Kim Reynolds, on the other hand, just tried to shift the focus.

Normally, I’m not a fan of these surveys. Mostly, because there are so many of them. And as two experts in economics pointed out in a Des Moines Register article, the methodology is subjective. Even so, their comments made it quite clear that, doubts about the survey aside, there is no doubt the state’s economy has been struggling for a long time.

That’s true even when compared with our Midwest neighbors, and it’s getting worse.

Just consider a couple of recent data points based on government figures that measure some traditional benchmarks of a state’s economy.

• First point: All of Iowa’s contiguous states added non-farm jobs over the past year, according to the Bureau of Labor Statistics report for April. But not Iowa. It was the outlier. Iowa lost jobs between April 2024 and April 2025. In fact, there was only one other state in the nation—West Virginia—that also lost jobs during the same period.

• Second point: Iowa and North Dakota were the only two states in the nation last year to see their real Gross Domestic Product shrink. And between 2021 and 2024, Iowa was the only state to see its real GDP shrink. Every other state’s economy grew.

Put those two points together and they add up to awful. And contrary to Kaufmann’s claims, this isn’t Biden’s fault. If it was, why are the states all around us adding jobs and Iowa is losing them?

Why do the economies of other states grow, but not Iowa’s?

It’s not just a recent problem, either.

As I wrote recently:

Since Kim Reynolds became governor in mid-2017, Iowa’s inflation-adjusted GDP has stagnated. Between the end of 2017 and 2024, GDP has grown by just 7.5%, or 1% per year.

Reynolds’ economy fails not only in comparison with the rest of the nation, but she falls short of her predecessors, too. According to a report by the Legislative Services Agency, Iowa’s nominal GDP, as a share of the US economy, has shrunk dramatically on Reynolds’ watch.

“Iowa’s share of U.S. GDP is currently at its lowest measure since the current federal statistics became available in 1997. Iowa’s share of the U.S. economy has decreased in seven of the past nine years,” the LSA report said.

That means while other states are gaining, Iowa is falling behind.

Source: Legislative Services Agency

Our incomes also are stagnating.

Real median household income in Iowa rose by just 4.1% between 2017 and 2023. This is less than half the income gains in Illinois, a state Reynolds and other Republicans regularly criticize as inept.

Iowa needs a change.

Reynolds announced recently she won’t run for re-election, which opens the door to the possibility of improvement.

This week, Democrat Julie Stauch, a West Des Moines businessperson, announced a bid for her party’s gubernatorial nomination, which means there will probably be a primary. Already, State Auditor Rob Sand has said he’s running for the Democratic nomination.

There are a number of Republicans who will likely run, too.

There are a lot of issues that will play into the 2026 campaign, but the failure of Iowa Republicans to position the state’s economy for success should be at the top of the list. They’ve failed when it comes to growing the labor force (while at the same time they discourage immigration, which drives what little population growth we have); they have failed to adequately deal with Iowa’s childcare shortage; and they can’t figure out how to deal with the exodus of young people who are fleeing to other states.

They also have radically altered our tax system to shrink income tax revenues, while shifting the burden to sales and use taxes.

Does anybody believe this will substantively improve Iowa’s economy? It hasn’t so far.

Meanwhile, Republicans in the Legislature reward their political allies and stoke the culture wars, all the while supporting a president in Washington, D.C., who raises taxes with tariffs on imports that will hit poor and middle-class Americans the hardest.

Does Iowa have the worst economy in the nation?

I don’t know. But I don’t think that’s the right question, either.

The right question is, do we have the political leadership we need to deal with long-standing economic and demographic deficits that are hurting the Iowans who stay and providing ample reason for our youth to leave? The answer to that question is clear: No, we don’t.

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