Des Moines Register
03-29-06
Growth of income plummets in Iowa
State's average increases 4%, compared with 8.7% in 2004
By DONNELLE ELLER
Register Staff Writer
After a year at No.1, Iowans will have to settle for a measly 40th place.
New statistics from the U.S. Bureau of Economic Analysis show that average
income in Iowa grew 4 percent last year, to $32,315. That places Iowa 40th in the
nation for income growth.
In 2004, Iowa's 8.7percent growth in income led the nation, outpacing fastgrowing states like Nevada.
The reason for the difference, experts say, mostly lies with farmers.
Iowa producers posted $5.7 billion in earnings in 2004, nearly triple the earnings
for 2003, thanks to strong livestock prices, bin-busting corn and soybean
production and strong government subsidies, said William Edwards, a
professor of agriculture economics at Iowa State University.
"All those good things happening at once don't happen that often - maybe once
every 20 years," Edwards said.
Last year was a good year for farmers, Edwards said, but not as strong as 2004.
High fuel prices ate into farm profits, he said. Changes in consumer trends —
fewer Americans following the high-protein Atkins diet, for example — and
market shifts — such as a ban on U.S. beef in Japan over mad cow disease
fears — pulled down livestock prices.
Also, farmers could have used better incomes to make capital purchases, such
as tractors and combines, said Harvey Siegelman, a former state economist.
That would have reduced income that was reported to the federal government.
Despite fluctuations in farm income, Iowa's economy appears to be growing.
The state's gross domestic product grew 5.5 percent in 2004, which gave Iowa
the eighth-largest increase in the nation. It was revised downward from first
place.
Agriculture accounted for much of the state gross domestic product growth, said
David Swenson, an economic scientist at Iowa State University. But core Iowa
industries — manufacturing, financial services, information services, and
insurance and banking — also performed well.
Overall, Iowa produced $111 billion in goods and services in 2004, the most
recent year for which data were available.
Iowa's strong showing in 2004 might have been a result of the state rebounding
later than the rest of the country, Swenson said. "We went into the recession
later and came out later."
A spokesman for Gov. Tom Vilsack said slower growth was to be expected with
higher fuel costs hitting Iowa agriculture.
Still, Iowans have seen personal income increase about 19percent since 2001,
said Rodell Mollineau, Vilsack spokesman. Iowa added about 24,000 jobs in
2005.
Mollineau said Vilsack wants to continue investing in the creation of new jobs
through the Iowa Values Fund. Those jobs pay an average of $39,000 annually,
the state reports.
The new federal statistics show Iowa ranks 28th in the nation for personal
income. Residents are paid $2,271 less than the average American, who
snagged $34,586 last year.
Even though the average income of Iowans in 2005 was less than the average
American's, the state is not losing ground as fast as it has in the past, ISU's
Swenson said.