Each year, we give our audience the chance to weigh in on how they think the Iowa economy will fare in the coming year in our annual Economic Outlook Survey. We asked respondents to rank their opinion on a scale of 1 to 5. 

Of the 61 responses we received, one-third said they believe the Iowa economy will improve slightly in 2026. The next most common responses were regress slightly (23%) and stay about the same (21%). Smaller proportions of respondents expect the economy to improve dramatically (13%) or regress dramatically (11%). The responses are broken down in the graphic above.

Those who said they see the economy improving slightly this year noted more stability in interest rates, potentially lifting barriers to lending and financing new projects if that steadiness continues. Several also mentioned more willingness among businesses to make long-term investments in areas such as commercial real estate and technology, including artificial intelligence.

The responses predicting a regressed Iowa economy were in a position of wait-and-see, given the uncertainty and caution that came from many directions in 2025, from tariffs to interest rates.

If those conditions persist in 2026, respondents said that creates concerns about overall economic stagnation or slowing growth. 

The responses also mentioned high costs and tariffs that affected projects in 2025 and how higher consumer costs can affect the banking and insurance industries. Uncertainty around property tax policy and the future of state finances following tax cuts in recent years was another theme.

Regardless of respondent’s answers about the direction of the economy, the depressed ag economy was widely cited as a threat as the negative effects have bled into other industries and dragged down the state’s economy as a whole. Workforce concerns also commonly appeared as Iowa’s biggest threat, ranging from shorter-term needs like housing and social supports to the state’s long-term population challenge.

In their comments, readers share how they think the economy might affect their industry this year and what they see as the biggest threats to the state’s economy. The results of the survey, in its 15th year, are not scientific but offer a glimpse into what other business leaders think as you make plans for your own business.

Here’s some of what we heard. Responses have been lightly edited for clarity and brevity.

— Sarah Diehn, Business Record editor

Agriculture

Robert Riley, board chairman, Riley Resource Group

2 – Regress slightly

Tariffs, high input costs and low commodity prices all reduce farm profitability, discourage investment and strain rural economies. High risk for crop producers lowers land prices, promoting consolidation and exits from the industry and state.

Biggest threat: Tariffs, low commodity prices, high input costs equal shrinking ag sector, affecting ag manufacturing and rural Iowa. Everybody loses, yet still votes against prosperity.

Arts and entertainment

Matthew McIver, founder, McIver Communications

1 – Regress dramatically

Arts and culture are economic drivers, but if folks don’t have funds to spend, [it is] the kind of discretionary spending that can get cut first.

Biggest threat: Tariffs are clobbering agriculture. The negative immigration policies and discriminatory approaches of the majority party are damaging population growth, as well as talent attraction and retention. The state was next to last economically in 2024 and GDP shrank — that was before the impact of the tariffs and the repeal of civil rights.

Banking and finance

Adam Gregg, president and CEO, Iowa Bankers Association

4 – Improve slightly

The banking industry will continue to be a partner in the economic growth of our state. With interest rate stability (and modest projected decreases in short-term rates) we expect steady to increased deal flow. Despite these positive developments, we will continue to see consolidation in the banking industry itself, with significant M&A activity likely in 2026 after an active fourth quarter of 2025 where we saw two major Iowa banks acquired.

Biggest threat: This is Iowa and so much revolves around agriculture. If the current downturn continues, it will put increased pressure on many sectors of Iowa’s economy.

Jennifer Cooper, senior vice president – commercial real estate, Bankers Trust Co.

2 – Regress slightly

Continued economic uncertainty may continue to have an impact on clients proceeding with projects. Several have been delayed based on costs of construction materials and how enacted tariffs may change pricing. While short-term rates have trended down due to Federal Reserve actions, long-term rates have not decreased at the same pace. Both issues can quickly cause projects to be financially unfeasible.

Biggest threat: Three that I can think of. An election year is always cause for concern and the governor’s race will be contentious. Continued population issues and being unable to fill job openings is an ongoing threat as well. Cost of housing and overall increase in grocery prices may start to take its toll on Iowa’s disposable income and consumer spending.

Don Coffin, CEO, Bankers Trust Co.

4 – Improve slightly

Many of our commercial customers, along with other Iowa businesses, are optimistic about the year ahead. If we see economic growth, the banking industry will likely see stable or modest growth in lending demand, with small business, ag and housing credit steady. Deposit growth should remain steady, but competition for quality loans will continue to intensify, and credit quality for Iowa banks could be pressured by lower ag revenues and farm margins.

Biggest threat: Population. An aging workforce and difficulty attracting skilled workers, combined with farm cost pressures and weaker state revenues, could constrain growth across sectors in 2026.

Building and construction

John Irving, president – Central Iowa Division, Tri-City Electric Co.

3 – Stay about the same

The construction industry for private projects, excluding publicly funded projects and data centers, has been in a slow decline the past 2-plus years and I don’t see anything in the immediate future that will change that. We still have a surplus of vacant office and warehouse space so no one will build those for a while. Entertainment, hospitality and recreational projects struggle to get financing.

Biggest threat: If the agricultural economy could improve, it would make a huge difference around the state to vendors, suppliers and contractors.

Consulting

Michael Keen, managing director, Inngility Advisors

1 – Regress dramatically

The manufacturing sector in Iowa will feel this regression early and unevenly. Higher energy costs, tighter incentive scrutiny and delayed capital investment will slow expansion plans. Projects tied to electrification, automation, and advanced manufacturing will face permitting and grid constraints. Labor shortages will persist as workforce funding shifts toward retraining rather than capacity growth. The result is a pause in modernization, not a collapse, but enough friction to erode competitiveness against neighboring states.

Biggest threat: Policy uncertainty ahead of the 2026 election is freezing investment as energy costs, incentives and regulatory rules become unpredictable, driving capital to more stable states.

Jim Langin, president, Langin Solutions Consulting and Finance

3 – Stay about the same

Prices will remain high (groceries, housing, automotive and construction materials). However, with thoughtful rate cuts by the Fed toward the end of 2025, companies and consumers will balance and can borrow reasonably if necessary. As others, I suspect AI will continue to affect commerce positively from an efficiency standpoint and negatively with the elimination of entry- and middle-level positions.

Biggest threat: Declining labor force. The state losing residents to other states as well as one of the oldest labor forces in the country.

Economic development

Austin Strawhacker, state director, Small Business Development Center Iowa

3 – Stay about the same

If the overall economy stays the same, I expect the small business sector to be steady but cautious with modest sales growth in some segments and continued pressure on cash flow in others. Small businesses may need to prioritize productivity and efficiency over expansion this year. Small businesses will likely manage to hold revenue, but with customers remaining value-conscious and less willing to absorb price increases, margins will remain tight.

Biggest threat: The biggest threat to Iowa’s economy over the next year is limited access to capital for small businesses during a period of economic uncertainty. Even with stable demand, cautious lending practices and higher financing costs can restrict small firms’ ability to invest, hire and maintain cash flow. In Iowa and nationwide, this can particularly affect startups, rural businesses and ownership transitions, which may slow broader economic growth.

Tiffany Luing, economic development coordinator, city of Bondurant

2 – Regress slightly

Rising costs of living and operating expenses are creating a more cautious economic environment. These pressures have begun to slow development activity and delay investment decisions as business owners take a more conservative approach before expanding or making significant financial commitments. As a result, growth within the industry may progress at a slower, more measured pace in the near term.

Biggest threat: Rising costs, high interest rates and economic uncertainty threaten Iowa’s economy by slowing business investment, workforce growth and development activity, particularly for small businesses.

Rachel Wacker, executive director, Greater Dallas County Development Alliance

2 – Regress slightly

Site location decisions will take longer as companies weigh the pros and cons of Iowa’s business climate.

Biggest threat: Our industry continues to monitor workforce issues, tariffs and their impact on manufacturing and agriculture sectors, and commercial property tax reform.

Tiffany Tauscheck, president and CEO, Greater Des Moines Partnership

4 – Improve slightly

With 28 new and existing business location and expansion projects completed across the region this past year and a record 140 active project leads, Greater Des Moines is well positioned for continued economic growth. This momentum will drive demand for commercial real estate, talent development and regional services, supporting both established employers and emerging companies in the coming year.

Biggest threat: One area of focus will be on ensuring continued workforce and infrastructure capacity keep pace with development. Greater Des Moines will meet this need through regional collaboration, innovation and public-private partnerships.

Health and wellness

John Forbes, pharmacist, Medicap Pharmacy, and retired state legislator

1 – Regress dramatically

The economy will have a major impact. Pharmacies in rural Iowa will continue to struggle and many will close.

Biggest threat: Decreased farm income and the 3.8% tax cut that will decrease the revenue for the state of Iowa. In two years we will be in a major crisis financially.

HR and Leadership

Marcela Hermosillo-Tarin, division HR director, Arvum Senior Living

4 – Improve slightly

In 2026, modest economic improvement will continue to pressure health care and HR due to persistent workforce shortages, wage inflation and rising benefit costs. Iowa’s aging population will increase demand for senior living and health care services, while reimbursement growth remains constrained. Organizations that prioritize retention, leadership stability and technology-enabled workforce planning will be best positioned to sustain care quality while maintaining financial sustainability.

Biggest threat: Continued workforce shortages — especially in health care — requiring innovation, productivity gains and smarter workforce strategies to sustain growth and service delivery.

Todd McDonald, president, ATW Training Solutions

5 – Improve dramatically

2025 was a year of wait and see. Government, tariffs, economy all pushed organizations into a wait-and-see strategy. As we look to 2026, we know more about what reality is and it will allow organizations to make decisions that they feel more comfortable with.

Biggest threat: Iowa’s economy is directly tied to agriculture, manufacturing and construction.  How those specific industries do in 2026 will be catalysts for the Iowa economy.

Insurance and Investments

Tej Dhawan, managing director, Plains Angels

2 – Regress slightly

I believe the slight regression in the economy will reduce broad access to capital for early-stage companies and limit its availability to high-quality founders and favor execution over speculation.

Biggest threat: Long-term growth achieved via innovations and inventions is highly dependent upon higher education. A waning focus on higher education will further reduce our competitive stance in the global economy.

Grant Kvalheim, CEO, Athene

4 – Improve slightly

Our business is poised for continuing growth as nearly 12,000 Americans reach retirement age daily and continue to need to close the retirement savings gap. We will continue to invest in an expanded workforce, automation/AI and new markets to capture the growth opportunity.

Biggest threat: I think the biggest threat to Iowa’s economy will be the agriculture sector where net farm income is expected to decline significantly.

Adam Claypool, president and CEO, First Community Trust

2 – Regress slightly

Most of the economic decline will affect growers and consumers, which generally also negatively impact financial institutions, as well as the insurance and investments sectors.

Biggest threat: Weak commodity prices, high input costs and elevated interest rates will pressure Iowa’s economy, particularly in the ag sector. Trade policy uncertainty could also have a negative impact. Continued pressure in the ag sector would impact rural communities generally, including financial institutions serving rural communities (credit unions, banks and insurance companies writing ag and property related coverages).

Jed Gammell, shareholder and producer, Highstreet Insurance Partners

3 – Stay about the same

Reinsurance rate increases have tapered off dramatically, particularly for property-driven businesses, which will eventually be reflected in the retail market. Some sectors will experience rate decreases in 2026, while others will see flat to slightly increased pricing.

Biggest threat: Continued K-shaped economic pressures, increases in cost of living, immigration policy and quality of life factors will compress population and economic growth in Iowa.

Law and government

Luke Mohrhauser, managing partner, McKee Voorhees and Sease

2 – Regress slightly

There will be certain aspects (e.g. ag and university innovation) that I think will be hit the hardest, which will affect intellectual property and product development.

Biggest threat: Low commodity pricing will continue to hurt large and small ag businesses, putting more out of work.

Manufacturing and logistics

Mike O’Donnell, director, Center for Industrial Research and Service

3 – Stay about the same

Manufacturing will continue to see a wide spread of outcomes, with high-performing manufacturers thriving in an uncertain market, while those that have fallen behind struggling to regain their footing.

Biggest threat: Global trade turbulence.

Randy Worth, president, RLW Consulting

4 – Improve slightly

The logistics industry tends to mirror the economy nationally. Very spotty locally, Des Moines has lost overall in spite of the volume through DSM Transload.

Biggest threat: Iowa’s position as an agricultural state will never allow it to participate in a vibrant economy the same way manufacturing does.

Real estate and development

Charlie Cowell, urban planner, RDG Planning and Design

3 – Stay about the same

Depends on how municipalities can adjust to tax changes and more limited budgets to spend on community amenities and projects.

Biggest threat: Our own state government limiting local control and flexibility to invest in economic development that fits local needs.

Karie Kading Ramsey, CEO, Kading Properties

3 – Stay about the same

Iowa’s economy is strong heading into 2026, but future growth depends on solving the workforce housing shortage. In many small and mid‑sized cities, employers are ready to expand yet struggle to attract or keep workers because there aren’t enough attainable homes. Outside major metros, housing has become the biggest barrier to economic momentum. For Iowa to sustain growth, communities must prioritize building housing that aligns with workforce needs in 2026 and beyond.

Biggest threat: Iowa’s biggest economic threat next year is its workforce housing shortage, which limits business expansion, restricts labor supply and slows growth in small and mid‑sized communities.

Adam Kaduce, president, R&R Real Estate Advisors

4 – Improve slightly

In commercial real estate, companies are back to making long-term decisions. They are being intentional about creating a space where their people want to be, and spending more days in the office.  Companies are designing new space with room for continued steady growth into 2026.

Biggest threat: Corporate acquisitions or layoffs that result in fewer employees in Iowa.

Technology and innovation

Todd Kielkopf, president, KAdvise Solutions

2 – Regress slightly

Tech funding and market adoption in the ag sector will continue to be challenging given continued low farming profitability. Adequate market liquidity, lower prime rates and AI productivity gains are positive offsets.

Biggest threat: Lower real median household disposable income is impacting main street small businesses and looks to be creating a negative cycle.

Margaret Anderson, information security consultant, MSA InfoSec

4 – Improve slightly

More spending on cybersecurity technology due to more spend on technology investments such as AI.

Biggest threat: Home prices for young people need to come down to allow those that stick around after school (high school/college) and other working adults to start families and thrive.

Transportation

John O’Halloran, president, Quality Services Corp. 

1 – Regress dramatically

Trucking industry is already struggling and will continue to struggle in 2026.

Biggest threat: More bankruptcies.