After a year of rapid policy changes, continued challenges for the ag economy and higher costs for businesses and consumers, panelists said during the Business Record’s Economic Forecast event that uncertainty will still be a hurdle in 2026 but there is potential for growth. 

The panel, held Jan. 20, ranged from discussions on business confidence, inflation and the state’s revenues to the potential economic impacts of Iowa’s water quality, cancer rate and long-term population challenge.

The panelists included:

• Robin Anderson, state chief economist and division administrator, research and policy division, Iowa Department of Revenue
• Debi Durham, director, Iowa Finance Authority and the Economic Development Authority
• Amy Friedrich, president of benefits and protection, Principal Financial Group
• Eric Lohmeier, president, NCP
• Jeff Lorenzen, CEO, American Equity Investment Life Holding Co.

Here are our reporter’s takeaways from the discussion.

Future of Iowa’s economy

Panelists were asked whether they thought Iowa’s economy would improve or regress in 2026. Friedrich said that while Iowa’s fundamentals are good, the state’s economic growth would be very slight. “Those fundamentals don’t play out unless you have … companies that are willing to do things with wages or add new jobs or expand,” she said. “The basis that we have to grow from is the fact that we don’t have overarching certainty. [Research shows that] certainty and economic growth are tied together. … There’s probably not as much certainty as we need” to drive growth.

— Kathy A. Bolten

Watching wage trends

Principal Financial Group quarterly surveys U.S. employers about the financial health of their company, Friedrich said. “The research we’ve done on [artificial intelligence] — whether you’re a large business or small business — consistently says that what people believe is going to happen with wages is that wages will go up. Literally nobody — and we just surveyed 1,000 businesses — says wages will go down. So, most people believe wages will continue to go up and they also believe that employment won’t go down but that it might stay steady or just grow at a little bit slower rate. We watch the wage data as much as we watch the labor data.”

— Kathy A. Bolten

Stronger educational systems 

Lorenzen raised concerns about the decline of students enrolling in Iowa’s public universities and private colleges. As enrollment declines, some private colleges and universities will likely struggle to stay open, he said. The enrollment decline will also affect the ability of companies like American Equity to hire skilled employees, he said. At times, when American Equity is searching for someone with actuarial or financial experience, the company is forced to allow the potential new employee to work remotely because they don’t want to move to Des Moines, Lorenzen said. “I would love to be able to have an environment where the education system here is top quartile, where it brings families in and they want to be here. … I just don’t think we’re going to have the skilled workforce that will be able to meet some of those growth demands that we hope to see in the future.”

— Kathy A. Bolten

Tariffs pose risk to trade relationships

Durham said she believes Iowa will get to a place where “we’re just going to get comfortable with 15% to 20% tariffs,” but Lohmeier disagreed, saying continued high tariffs and trade volatility puts at risk supplier relationships in agriculture that have been built over “decades and generations,” including in areas like Brazil, a top competitor with the U.S. on exports. “I just think that might not be something that we saw in the last six months or what we’re going to see in the next 12 months, but once the next ruckus comes up with China, how many soybeans are they going to buy?” Lohmeier said. Anderson said that the impact of the ag sector’s challenges on state revenue are more secondary because farm income is not a main source of state revenues. “A lot of farmers don’t pay taxes, so I think there are secondary effects going on here,” she said. “It’s [about] are people feeling confident enough to want to spend? How are corporations doing that are interconnected with the ag sector? And how do you see small farmers or small businesses pay their individual income taxes, not necessarily their farm income taxes.”

— Sarah Diehn

Focus on productivity

Durham said she believes the state’s new focus on productivity rather than number of jobs will pay off in 2026. “We’re going to focus on capital investment with industry 4.0 principles because we’re going to drive productivity because basically, growth takes care of a multitude of issues in our economy,” she said. “We went live in January and in February you’re going to see some incredible projects come forward because we’re incentivizing the right things. We’re still going to have jobs. They’re just not going to be a big number of jobs. But what the jobs are, are jobs that pay people living wages. So, we’re concerned about the quality and not the quantity.”

— Michael Crumb

Adopting AI

Lorenzen said companies are focused on how to use artificial intelligence to promote business rather than replacing employees. He said a quarter of insurance companies are using AI to replace employees to answer phones. There is a cost to doing that, he said, and he believes AI can be a differentiator. “I don’t think it’s going to get us the productivity that’s embedded in the equity markets. I think it’s over-extended and people are overly optimistic.” Lorenzen said a lesson learned over the past year or two is that companies need to be more aggressive in their approach to AI and not be afraid to be early and find ways to automate. At his company, AI is being used on the customer service side to reduce response times and answer more calls with fewer bodies.

— Michael Crumb

Water quality

Lohmeier said Iowa’s poor water quality ranking is being noticed by others across the country and more investment is needed to improve water in Iowa, which he said correlates to the state’s high cancer rates. He compared Iowa’s water quality and cancer rates to the lead crisis Flint, Mich., has experienced. Lohmeier said some of the money that is being put toward cancer research should be funneled to improving water quality. “To me, that’s maybe a solution. We really have to address the source and there are ways we can do that, I think, in a very bipartisan, rational way.”

— Michael Crumb