For a while Iowa’s robust farm sector, about 20% of the state’s gross domestic product, insulated the state’s economy from the financial crisis that has brought down many investment banks and laid off thousands on Wall Street.
Domestic and global demand for Iowa farm commodities kept state tax revenues flowing. But the financial crisis has begun to exert a drag on the Iowa economy.
The state is in fact not that far removed from Wall Street. Iowa enjoys one of the larger insurance industries in the nation. Companies headquartered in Iowa employ thousands. And thousands have been laid off in the wake of imploding company portfolios containing many of the investment instruments now known as “toxic assets”.
Lay-offs, slowing consumer demand, and tighter credit from cautious lenders now touch every sector of the state’s economy.
As consumer and commercial borrowing have ebbed, the lack of capitol flowing into the economy has slowed home sales, construction and business expansion.
Be it financial services, industrial goods or farm commodities, slaking demand for what Iowa produces, has pulled Iowa’s unemployment higher, nearly in tandem with the nation’s more severe jobless rate.
And, many who remain employed find themselves working fewer hours, with fewer benefits and sometimes in positions beneath their credentials.