IOWA, USA (WOI) – As Local 5 reports, research conducted by Moody Analytics’ chief economist Mark Zandi shows 22 states in the U.S. could soon be in a recession, including Iowa.
In June, a WalletHub study claimed that Iowa’s economy was last in the nation, attributing slow growth to low activity in all of the following: Startup activity, GDP growth and number of non-farm payrolls, which refers to goods, construction and manufacturing companies.
However, the director of policy and research for Common Sense Institute Iowa Ben Murrey tells Local 5 that Iowa’s recession risk is less about the state’s individual economy and more about the national labor market slowdown.
“The U.S. economy is just slowing down, and we’re seeing that particularly in job numbers,” Murrey said. “[The Federal Reserve] just lowered interest rates. They pointed to the job numbers [and] weakening jobs market in the US. It’s a broader US thing.”
Aside from the job market, there are a few economic factors at play that are unique to Iowa.
“In the past several years, when manufacturing is underperforming the broader economy, that’s going to drag Iowa down,” Murrey said. “I think in Iowa’s case, it’s sort of incidental largely to the state’s industry makeup.”
Iowa’s manufacturing industry is just one element on the forefront for state officials. During the October Revenue Estimating Conference, Jennifer Acton, the division director of fiscal services for the Iowa Legislative Services Agency, noted several concerns about Iowa’s agricultural economy.
“Disruptions to global markets, variability of crop yields across the state and lower commodity prices are creating tough marketing decisions for farmers and increasing the strain on Iowa’s agriculture and manufacturing sectors,” Acton said.
Governor Kim Reynolds spoke to these worries on Thursday, saying there is a “softening” in the state’s economy. However, she believes a recession isn’t likely.
“We’re strong. We’re doing well,” Reynolds told Local 5. ‘I think the revised numbers from the Bureau of Economic Analysis really underscores that fact… When we look at Q2, we actually are 18th in the country for GDP growth.”
The Revenue Estimating Conference projected Iowa’s tax revenue will decrease by 9% for fiscal year 2026, a concern for many Iowa Democrats.
“This news confirms what I’ve been saying for years — our state budget has been run into the ground, and the surplus, provided largely from federal funds, will only steady us for a short time,” State Auditor Rob Sand said in a statement.
Murrey says Iowa’s decrease in revenue isn’t automatically an unfavorable sign for the state’s economy.
“The reduction in revenue that we’re seeing is largely intentional and, frankly, probably good for Iowa’s economy, because it’s not a result of bad economic performance, per se,” Murrey said. “It’s largely a result of deliberate policy decisions to return excess revenue back to taxpayers.”
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