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Release: Immediate

Moderate economic growth in 1998, UI forecasters say

IOWA CITY, Iowa -- Real personal income for Iowans is expected to grow strongly in the first three months of 1998, but will moderate to about 1.8 percent growth over the course of the entire year, the director of the University of Iowa's Institute for Economic Research says.

Beth Ingram, associate professor of economics in the College of Business Administration, says 1998 is expected to start solidly because strong economic growth from 1997 is expected to carry over into the first quarter.

"The economy is still going up, but the question is, 'By how much will it go up?'" Ingram says. "We expect the rate of growth that we've seen will slow somewhat in 1998."

Ingram, who also chairs the Iowa Economic Forecasting Council, a state commission that provides data on economic trends and issues to state policymakers, says Iowa's economy has been relatively stable since recovering from the farm crisis of the 1980s, and the flood-affected years of 1993 and 1994.

Traditionally, Iowa's unemployment rate is lower than the national average, but Iowa's economic growth has followed upward national trends during the past five years.

According to the Institute's projections for the new year:

-- Real personal income (that is, adjusted for inflation) will grow about 2.8 percent in Iowa in 1997. That compares to estimates of 3.7 percent growth nationally for the year.

-- Real personal income will grow about 1.8 percent in Iowa in 1998, compared to about 2.5 percent nationally.

-- Farm employment is expected to grow about 0.4 percent in 1998, down from 1997's growth of 1.5 percent. Jobs in durable goods and manufacturing are also expected to decline in 1998.

-- Most non-farm employment growth is expected in the service sector, which is expected to grow by about 2.4 percent in 1998, down from 3.9 percent in 1997.

"The economy is creating new jobs and will continue to create new jobs, but not as quickly as it was in 1997," Ingram says.