Many Iowa companies have found ways to adjust and manage changes related to tariffs and other economic changes, improving their outlook for the coming year, according to the Iowa Business Council’s latest survey. 

The council released today its fourth quarter Economic Outlook Survey for 2025, which measures IBC member expectations for sales, capital spending and employment for the next six months. If the index measures above 50, sentiment is positive. 

The survey’s overall economic outlook index for the fourth quarter is 63.16 points, an increase of 3.16 points from the third quarter and more than two points higher than the historical average of 60.40.

At this time last year, the index was at 65.63, and in October 2025, when IBC released its last quarterly outlook, the index was at 60.0. 

“With the continued uncertainty on the federal level with respect to tariffs, we’re still sort of muddling through this regulatory reform effort at the federal level,” said IBC President Joe Murphy. “To see a good uptick and well above that 50-point threshold is great news.”

Across the three measured subindices, sales expectations generated the largest increase.

“The fact that the sales expectations were up dramatically over the previous quarter is an indicator of surging demand, or at least the optimism of surging demand over the next six months,” Murphy said. “That’s obviously a very good place to be when you think about Iowa companies’ ability to meet that demand and to promote their products.”

Capital spending and employment expectations measured flat, but above the 50-point threshold:

• Sales expectations increased 8.29 to a value of 65.79. 
• Capital spending expectations increased .66 to a value of 63.16.
• Employment expectations increased .53 points to a value of 60.53.

“Such a large increase in sales expectations from IBC members provides important insights into growing demand,” Gage Kent, CEO of Kent Worldwide and chairman of the Iowa Business Council, said in a news release. “The next six months are critical as we look to take advantage of this optimism and expand business growth and investment in Iowa.”

Murphy said many companies are still dealing with a lot of business uncertainty and are taking a wait-and-see approach, but sentiment is up. 

“I do think that companies have put in processes that will enable them to get through whatever is going to occur, and I think that’s what we’re seeing in this increase in optimism,” he said. “They’re saying, ‘We’ve weathered a lot over the last 12 months, and we’re expecting good things ahead,’ and that’s obviously a good place to start the year from.”

IBC’s survey doesn’t track businesses by industry, but Murphy said the organization is keeping a close eye on agriculture and manufacturing, two of Iowa’s biggest industries. 

“This isn’t necessarily reflected in the report, but one of the things that we’re going to continue to observe and to monitor is the ag economy and seeing what is going to happen with respect to the Chinese government buying more soybeans,” he said. “Hopefully that continues. It has a huge impact on Iowa’s economy. Beyond that, once the Chinese start to buy more of these soybeans based on whatever framework agreement that’s in place right now, what effect does that have on some of the secondary markets in manufacturing that are tied to agriculture.”

Hiring expectations and capital investment indices were flat during this survey, therefore the IBC is exercising some caution when it comes to outlook. 

“We’re continuing with some cautious optimism about Iowa’s economy,” Murphy said. “We’re excited for the future. There’s some really important policy prescriptions, whether they be property tax or housing or other things like that, that will have an impact on Iowa’s business competitiveness and affordability for individuals in the state. Those are all important aspects to have a thriving economy in Iowa, and that’s something that we’ll continue to work on.”

The top business challenges identified by IBC members are:

• Unfavorable business climate (national supply chain, infrastructure, federal regulations) at 58%.
• Workforce attraction and retention at 53%.
• Cost of health care and insurance was cited by 47%.

IBC will be tracking these issues on a state level when the Iowa legislative session starts Jan. 12. Murphy said IBC will be talking with lawmakers about issues affecting Iowa businesses, such as ways to keep Iowans in the state to retain workers and property taxes.  

“One of the primary business challenges that our state is dealing with is attraction and retention of a qualified workforce,” he said. “What can we do to continue to make sure that we’re retaining our population and bringing in new Iowans across the border into our state, and hopefully they have the opportunity to live and work in the communities that are hiring. That gets into housing, that gets into property taxes, which is a housing affordability conversation, that gets into health care, as well.”

The IBC is a nonpartisan, nonprofit organization whose 21 members are the chief decision makers of the state’s largest employers. The Economic Outlook Survey has been completed by IBC members on a quarterly basis since 2004. The report provides insight regarding the projected trends for the state of Iowa, which can be used for business and economic planning. To review previous Economic Outlook Surveys, visit the IBC website.