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Release: Immediate

Iowa's economy to experience moderate growth in 1997 and 1998

IOWA CITY, Iowa -- The Iowa Economic Forecast, released today by The University of Iowa Institute for Economic Research, predicts moderate growth for the Iowa economy for 1997 and 1998. The report was prepared for the Iowa Economic Forecasting Council, which received it today in Des Moines.

According to the Institute, Iowans' real personal income (that is, adjusted for inflation) grew about 3.6 percent during 1996. The forecast indicates that real personal income will grow an additional 2.4 percent in 1997 and 2 percent in 1998.

Institute Director Charles H. Whiteman said that the 1996 figure was in accord with earlier predictions. "Growth at 3.6 percent is quite strong for a year when we were not recovering from a recession, flood or drought," he said.

Nonfarm employment is predicted to grow about 1.5 percent in 1997 and just under 1 percent during 1998. As has been true in recent months, the service sector will show the strongest growth, and manufacturing of nondurable goods will be the weakest.

The Institute also released state tax revenue forecasts. Whiteman indicated that the Institute's model predicts that fiscal year 1997 revenue growth could be between 5 and 5.5 percent, very much in line with the state's official forecast of 5 percent. He cautioned that the uncertainties surrounding revenue forecasts are large. The state's Revenue Estimating Conference will meet in April to consider whether to change the official estimate.