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Taking a Second Look at Iowa’s Economic Success Taking a Second Look at Iowa’s Economic Success

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Taking a Second Look at Iowa’s Economic Success


Wind farm in Iowa countryside.(Courtesy of Google)

In the run-up to an election that will hinge on the economy, Iowa looks pretty good.

As the national unemployment level remains staggering at 8.6 percent, the rate in Iowa is just 5.7 percent. Thirty-six states lost a larger percentage of jobs than Iowa during the recession.  


But the relatively low unemployment rate makes it easy to gloss over the impact of the downturn on this Midwestern state. True, Iowa entered the recession later than the rest of the country and avoided the brunt of its impact. The Great Recession, however, left a mark on the Hawkeye State that citizens are still feeling, suggesting that Iowa, just like the rest of the country, is going to vote on the economy.

“One of the things that strikes me is that the general mood [in Iowa] is not as upbeat as the data might suggest,” said Charles Whiteman, an economics professor at the University of Iowa and director of its Economic Research Institute.

That could be because each of the state’s 99 counties has higher unemployment today than it did in 2007. The rates vary widely by county, with the highest at 8.9 percent and the lowest at 2.5 percent, suggesting that how Iowa’s voters feel about the economy could change dramatically over the course of a few-hour drive.


“For the unemployed person, it doesn’t matter if Iowa is doing so much better than the nation,” said Noga O’Connor, a research associate at the Iowa Policy Project, a nonprofit organization that analyzes economic and other issues. “If you’re unemployed, you’re unemployed.”

Like the national unemployment rate, Iowa’s has been slowly ticking down from its recessionary peak. But, O’Connor says, the jobs Iowa is gaining tend to pay less and offer few benefits.

And the most recent Midwest Economy Index, released by the Chicago Federal Reserve on Thursday, showed Iowa’s nonfarm business activity trailing its Midwestern counterparts in November. Total nonfarm employment contracted in November, despite the drop in the unemployment rate from 6.0 to 5.7 percent in the same month. That’s still a lot higher than the state’s 3.8 percent unemployment in November 2007, before the recession hit.

“It really has been more a depressed national economy than a strong Iowa economy,” said Peter Orazem, an economics professor at Iowa State University. “We’re doing better than other places, but we’re doing worse relative to where we were five or six years back.”


That could help explain why Iowa’s residents identified the economy as the country’s key concern in a recent University of Iowa Hawkeye Poll. More than 40 percent of respondents to the poll, which was conducted from Nov. 30 to Dec. 7, said the economy and recession was the most important problem facing the United States, more than double the figure for any other issue.

Describing national economic conditions, nearly half of respondents said they were “somewhat poor,” with 31.6 percent calling them “very poor” and just 18.7 percent saying they were “somewhat good.”

But it’s not just Iowans looking across their borders and seeing economic distress. The Iowa Legislature is expected to focus on economic issues when it sets the agenda for its next session, suggesting its constituents want to see action to improve the state’s economy.

Here’s the good news: Iowa’s economy has a lot going for it.  The housing sector largely sidestepped the recession by avoiding the boom-bust collapse seen on the coasts. The state’s agricultural economy remains strong. Transportation and warehousing—sectors that benefit from Iowa’s location right between the large Canadian and Mexican economies—have grown in recent years.

Economists and analysts expect Iowa, like the rest of the country, to continue plodding forward in its recovery next year.  Just over half of business leaders surveyed by the Iowa Business Council expect sales and capital spending to pick up in the next six months, and nearly half expect employment to do the same. Iowa State’s Orazem expects the U.S. economy to grow between 2 and 3 percent next year and Iowa to do that or better.

“I think there’s a cautious optimism out there,” said Elliott Smith, executive director of the Iowa Business Council. “For the most part, we feel we’ve weathered the bad part of the storm.”

Having avoiding the troughs of recession, Iowa’s road to recovery isn’t as long as many others. But GOP hopefuls should remember as they crisscross the state that it isn’t there yet.


CORRECTION: An earlier version of this story misidentified Iowa. It is referred to as the Hawkeye State. 

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