IOWA RETURNS TO SPOTLIGHT IN PRESIDENTIAL PRIMARIES.

Byline: Steven A. Holmes The New York Times

After an eight-year hiatus, Iowa has returned to center stage in the country's presidential contest, and in the intervening years, prosperity and confidence have swept across the state like a prairie wind.

Having weathered the farm crisis of the 1980s and the recession of the early part this decade, Iowa's economy is booming. Businesses have flocked to the state in recent years, pushing unemployment down to 3.3 percent, far below the national average. Per capita income rose by 40.8 percent from 1988 through 1994, a higher rate of growth than in the country as a whole. Exports are hitting record highs. And tax revenues have doubled since 1988, leaving the state with a $434 million surplus.

"You go all over the place and there are help-wanted signs everywhere," said Karla Underwood, Republican chairwoman for Linn County, which includes Cedar Rapids in the north-central part of the state.

The state's turnaround goes beyond robust economic figures or the surge in home construction west of Des Moines and along the corridor from Iowa City to Cedar Rapids. In the past three years, more people have moved to Iowa than have left, reversing two decades of population losses. And in an opinion survey conducted earlier this month by the University of Iowa's Social Science Institute, only 11 percent of those asked felt that they personally would be in a worse condition a year from now.

Iowa thus presents a markedly different picture than it did in 1988, the last time there was a hotly contested fight in the state's caucuses. Then, economic issues predominated, and the state's mood was sullen and angry. In 1992, Iowans were deprived of a national platform to express their views when President Bush ran uncontested in the Republican race and Democratic hopefuls conceded to Sen. Tom Harkin, a favorite son.

"The early- to mid-'80s were really tough times," said Thomas J. Miller, Iowa's attorney general, remembering the economic and psychological climate that surrounded the 1988 caucuses. "We were just coming out of it, and we really didn't have a whole lot of confidence in light of what we had just gone through."

But if times are rosier now, many Iowans are concerned about issues such as crime and remain mistrustful of politicians and the federal government, which played a pivotal role in bringing the state through its economic difficulties.

In the crisis of the 1980s, commodity prices dipped, farm values plummeted and bankruptcies soared. Iowa's farmers, whose output constituted about 45 percent of the overall economy, received an average of $1 billion annually in the form of federal subsidies, said Mike Duffy, an economist at Iowa State University.

Still, when asked in the University of Iowa poll how much they trusted the federal government to do the right thing, only 20 percent of those surveyed said just about always or most of the time.

"They're all a bunch of ex-lawyers who are nothing but real good liars, whether they are Republicans or Democrats," said Paul Hynick, the 59-year-old manager of the sea food department at the Hy-Vee grocery store near Ottumwa. "I think people ought to be involved in politics on the local level. But nationally? Forget it. Money pays for all of it."

But if the good times have relegated the economy to the back burner, a number of other things are on people's minds.

Although crime rates are much lower than in metropolitan areas, the fear of crime remains pervasive. "Crime - the gangs in their children's schools," said Linda Baker, a customer service representative at a Cedar Rapids printing plant, when asked what she and her friends talk about. "We have a gentleman here at work whose son was killed in April by a random bullet in a school yard."

As a result of the loss of population in the 1980s - mainly younger people who fled what they saw as a bleak future - Iowa's population is significantly older than the country as a whole. According to the State Health Department, 15.4 percent of Iowans are more than 65 years old compared with 12.7 percent of the country.

And while the state has staunched the exodus of people, the newcomers have changed the mix of many Iowa cities. "There aren't any Iowans in my neighborhood," said Richard Schwab, dean of the School of Education at Drake University in Des Moines who moved here from New Hampshire six years ago. "My running buddy's from California. My neighbor next door is from Pennsylvania. The other one's from Minnesota."