In the first weeks of the state’s shutdown to stop the spread of the coronavirus pandemic, Iowa’s economy lost an anticipated $1.6 billion, economists said Wednesday.

The presentation, hosted by the Tax Education Foundation of Iowa, a public policy think tank, included a review of the effects that COVID-19 had on Iowa’s economy in March and early April.

Ernie Goss, the Jack MacAllister chair in regional economics at Creighton University who releases a monthly economic survey, and Scott Strain, a senior economist with Goss and Associates, and adjunct professor at the University of Nebraska-Omaha, presented the finding of the report they wrote.

The report looked at the period from March 21 through April 11. During that time Iowa lost 243,000 jobs, just over $500 million in lost wages and about $74 million in self-employed income.

Strain said a big hit is expected in state and local sales tax receipts, and a $26 million decline is anticipated in state income taxes for Iowa.

He said the overall loss to state and local coffers during that time is about $112 million.

The total effect on the state’s economy is $1.6 billion, Strain said.

Goss said one macroeconomic trend to watch is the yield on 10-year Treasury bonds, which at between 6/10 and 7/10 of 1%, is at a record low. That is an indicator of risk global investors are seeing, forcing them into safer investments that aren’t as good of measures of economic health.

He also said he is concerned that the stock market is “a little overpriced right now. I think there’s too much optimism that there’s going to be a sharp recovery.” 

Goss said he expects the economy will recover slowly after the sharp decline, likening it to the Nike swoosh symbol.

Strain said he’s watching debt backed by revenue streams tied to real estate. He also said he’s watching debt issuance, which is larger than anticipated, and yields on seven-, 10- and 30-year Treasury bonds.

Both Strain and Goss warned against increasing taxes and restricting economic growth with too much regulation.

“This is no time to be raising taxes, and unfortunately property taxes in Iowa are already too high for the economic conditions, particularly in agriculture,” Goss said.

The economists said agriculture will be critical to the state’s economic recovery.

“There’s a huge demand for our food, and agriculture is very productive,” Goss said. “No farmer on the face of the Earth can compete with farmers in this part of the country. Let’s … get trade going again. That will be very important. Food demand is growing, particularly in Asia, they need our food and they will pay a premium.”

Strain said another thing to remember is that the country voluntarily shut down the economy.

“We did not have the type of policy misfire or shock that we’ve had to the system, like with oil in the past,” Strain said. “The economy is going to start growing. Now it may take 12 months, 18 months, it may take 24 months for all those supply chains to recouple, but to me, I’m optimistic [because] we did not suddenly become less productive.”