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Iowa fourth-quarter GDP shows improvement after pandemic-fueled downturn
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IOWA ECONOMY

Iowa fourth-quarter GDP shows improvement after pandemic-fueled downturn

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The Iowa State Capitol building Friday, July 31, 2020, in Des Moines.

DES MOINES — Iowa’s economy grew faster in 2020’s fourth quarter of 2020 and its pandemic-related losses were less severe than in many other states, according to a preliminary report on gross domestic product from the federal Bureau of Economic Analysis.

The real GDP increased in all 50 states and Washington, D.C., in the last quarter of 2020, from 1.2% in Washington, D.C., to 9.9% in South Dakota.

Iowa’s fourth-quarter GDP growth was 6.3%, according to the nonpartisan bureau, which is part of the U.S. Department of Commerce.

That exceeded the national GDP growth of 4.3% as well as growth in all neighboring states except South Dakota and Nebraska, which also saw 6.3% growth in the October-through-December period.

The bureau’s preliminary numbers on annual GDP for 2020 show decreased in all 50 states, ranging from one-tenth of a percent in Utah to 8% in Hawaii.

Although there are a variety of factors that affected GDP, Gov. Kim Reynolds’ office said “this good economic news is partially due to Iowa’s balanced approach to the COVID-19 pandemic that kept essential businesses like day care and child care open.”

“The vast majority of Iowa schools were able to safely reopen in August of 2020,” according to a statement from her office. “Iowa is also in a strong financial position and, unlike other states, we are not forced to drastically cut spending or raise taxes.”

However, Iowa State University economist Dave Swenson warned on Twitter that “one quarter does not an economy make.”

Overall, Swenson said, Iowa’s year-over-year economic growth “is still in negative territory.”

Iowa’s GDP fell 1.3% in the fourth quarter of 2019 — before the pandemic — and 2% in the first quarter of 2020 before plummeting 28.2% and 36.4%, respectively, in the second and third quarters, according to the bureau.

The fourth quarter rebound was fueled by finance and insurance — two significant players in Iowa’s economy, health care and social assistance, according to the bureau.

Finance and insurance grew in all 50 states and Washington, D.C., by 12.9%.

Not surprisingly, the biggest drivers of the GDP downturn were accommodation and food services, which “moderated” increases in 38 states, the bureau said.

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