Iowa was spared the massive housing foreclosures and double-digit jobless rates that wracked huge swaths of the nation during the recession. But some communities, especially manufacturing areas in the eastern part of the state, suffered layoffs and plant closings and have struggled to recover.
The state has reaped the benefits of the thriving agricultural economy, with farmers investing in big-ticket items such as equipment and buildings. That's helped keep a lid on unemployment, which peaked at 6.3 percent during the recession, high only by Iowa standards.
"We have lower unemployment because historically we have had high migration," says Dave Swenson, an Iowa State University economist. "We put the people we can to work. Those we can't, we say 'take a hike.' They don't leave because we don't love them. They leave because we can't use them."
"There is a tremendous amount of demand for Iowa-raised talent," he adds, with accountants, health care workers and other professionals relocating to Midwest cities such as Kansas City, St. Louis and Minneapolis.
Iowa tends to be viewed by outsiders as an "American Gothic" landscape of barns, two-lane blacktops and an endless horizon of lush green acres. But the state's No. 1 industry (in gross domestic product) is manufacturing — this is home to Pella Corp., Deere & Co., factories and meatpacking and pork processing plants. No. 2 is insurance and No. 3 is farming.
Iowa made a big push after the farm crisis to diversify beyond agriculture into insurance, banking and health care. The shift occurred in Carroll County, too, (population 20,000) which has a Pella plant, companies that produce jet fuel nozzles, fire and trash trucks, a winery and a giant warehouse that serves convenience stores.
Agriculture, to be sure, remains a huge business. About 86 percent of Iowa soil is in farms, according to Swenson. Most Iowa full-time farmers rent at least half their land, which has posted a dramatic increase in value.
The average cost of an acre of farm land, for instance, skyrocketed from $2,432 to $6,708 from 2000 to 2011, according to a survey conducted by Mike Duffy, an Iowa State economics professor. In Carroll County, the average acre last year was $7,921 — though some recently sold for as high as $12,000 an acre.
Crop prices are up, too. A bushel of corn that was $2.22 in 2001 was $6.15 last year. And while the average farm income jumped nationally more than 50 percent since 2000, in Iowa, it was more than triple that, Swenson says. (Those numbers are not adjusted for inflation.)
Add to that some trade muscle. This year, Iowa signed a $4 billion soybean contract with China. It came in conjunction with a visit from Chinese Vice President Xi Jinping, who'd first traveled to Iowa in 1985.
As powerful as Iowa's ag economy is, what many people don't realize is that one reason the state is doing well is "it benefits tremendously from federal programs," says Steffen Schmidt, an Iowa State political science professor. That includes tax breaks, crop insurance, subsidies for wind power companies, ethanol mandates for fuel blending and government-supported biofuel and biotechnology programs.
That should boost the president in Iowa, he says, but "the Democrats seem incapable of making that narrative. They don't seem to know how to make any political gains out of that ... they've abandoned the field to the Republicans. ... The Republicans have made a case, which is widely accepted, that government is bad and that government spending needs to be cut back."
Schmidt argues that all levels of government have been essential to the state's health. "The thing that concerns me most," he says, "is we're not recognizing all the things our government supports that make it possible for private enterprise to be so successful."
Iowa's good economy, he adds, could mean social issues such as gay marriage and immigration (the state's Hispanic population increased from 2.8 percent to 5 percent from 2000 to 2010) may become more important for some voters. The state has a strong social conservative Republican base, and in 2010 three Iowa Supreme Court justices were ousted after they supported a decision legalizing gay marriage.