Iowa’s gross domestic product grew 36.4% in the third quarter, slightly outpacing national growth during that same period, the Bureau of Economic Analysis reported last week before the Christmas holiday.
The GDP is the market value of goods and services produced by the labor and property located in a state. Iowa’s third-quarter performance was a stark turnaround from the 28.2% decline in the second quarter as the coronavirus pandemic’s grip on the state virtually closed the convention and tourism industry, shut down the arts and culture sector of the economy, and caused layoffs and furloughs in many industries.
Iowa’s number is in line with neighboring states, which saw increases from 32.1% in South Dakota to 40.3% in Wisconsin. Nationally, the GDP grew 33.4% in the third quarter, and ranged from 52.2% in Nevada to 19.2% in Washington, D.C.
The third-quarter increases reflected continued efforts to reopen businesses and resume activities that were canceled or postponed because of the pandemic, according to the report, released on Dec. 23.
In Iowa, third-quarter growth was underpinned by improvements in durable goods and manufacturing, which grew by 6.77%, and health care and social assistance, which grew by 4.07%. Nondurable goods manufacturing grew 3.45% in Iowa in the third quarter, with wholesale and retail trade, and accommodation and food services, experiencing more modest growth at between 2% and 3%, the report showed.
Arts, entertainment and culture grew by 0.78 in the third quarter after experiencing huge declines earlier in the year.
The 36.4% growth in the third quarter compares with 2.4% growth in the same quarter in 2019. Iowa’s GDP totaled more than $195.3 billion in the third quarter, up from $179 billion in the second quarter but still lagging behind the third quarter 2019 level of more than $196.5 billion, the report showed.
Tom Root, an associate professor of finance at Drake University, said Iowa’s third-quarter performance was “an expected rebound from the drastic decline in the second quarter caused by pandemic-related shutdowns.”
“While the third-quarter growth was substantial, the size of the Iowa economy is still $1.15 billion smaller than it was in the first quarter of 2020 and $764 million smaller than it was in the third quarter of 2019,” Root said.
He said the contributions of durable goods and manufacturing helped lead the state’s third-quarter growth, outpacing those sectors growth nationally, which combined for 5.98% growth during that period.
“The rebound in Iowa manufacturing is a positive sign for future economic growth as the state continues to struggle with the economic consequences of the pandemic,” Root said.