New Report Says Iowa’s Economy is the Worst in the US

At a time when the financial markets are volatile and economic uncertainty is heightened, this is the kind of news you don't want to hear, but perhaps need to hear in order to gain some kind of perspective.

This week, WalletHub released a report ranking the 50 states' economies, and let's just say, Iowa fared miserably. It's one thing to be ranked in the bottom half of the list. It's another to be dead last. That's where Iowa belongs, per WalletHub.

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Iowa ranked 51st on WalletHub's new list (District of Columbia was included, along with the 50 states). The report measures economic performance and strength across 28 "key indicators," which includes economic activity and health, along with innovation:

The Methodology Behind WalletHub's Study:

In order to determine the best state economies, WalletHub compared the 50 states and the District of Columbia across three key dimensions: 1) Economic Activity, 2) Economic Health and 3) Innovation Potential.

We evaluated those dimensions using 28 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the highest economic performance.

We then determined each state and the District’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample - per WalletHub's website

Why is Iowa's Economy Ranked Dead Last?:

WalletHub ranked Iowa last in economic activity, 48th in economic health, and 29th in innovation potential. Only New Jersey, Louisiana, and Illinois ranked lower in economic health than Iowa.

The report went on to add that Iowa has one of the lowest changes in gross domestic product (GDP), the lowest amount of startup activity on the business front, and one of the lowest changes in nonfarm payrolls in the entire country. The latter addresses the fact that so much of income earned in Iowa is agriculture based.

Iowa Has a Brain Drain Problem:

Over the last couple years, I've read about Iowa's lingering "brain drain" problem. The term "brain drain" is defined as "the emigration of highly trained or intelligent people from a particular country," or in this case, state.

Last year, The Des Moines Register wrote about Iowa's brain drain problem by addressing the fact that a number of high school graduates are leaving Iowa to attend out-of-state universities. From there, they don't return to live, work, and spend in their home-state.

In 2024, the percentage of college students who planned to stay in Iowa after graduation was at 41%, down from 47% in 2008. Iowa ranks among the states with the highest net loss of college graduates, down there with South Dakota, Mississippi, Oklahoma, Louisiana, and Missouri. Those numbers tells their own story.

Either way, this is damning and concerning news for the health and prosperity of Iowa's economy in the long term. See the complete results of WalletHub's report here.