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Release: Immediate

UI report predicts strong Iowa economy in 1997, moderate growth in 1998

IOWA CITY, Iowa -- The economy of Iowa will finish strong in 1997, followed by moderate growth in 1998, especially in the first quarter, while prospects for employment have dimmed, according to the Iowa Economic Forecast released today (Thursday, Nov. 13) by the University of Iowa Institute for Economic Research.

Beth Ingram, director of the Institute, said estimates from earlier in 1997 have been revised upward.

"Early in the year, we were predicting a somewhat slower rate of growth in income for the second half of 1997," Ingram said. "However, we now expect the economy to maintain a steady pace of growth in the final months of the year."

The report was prepared for the Iowa Economic Forecasting Council which received it today in Des Moines.

According to the report:

-- Real personal income (that is, adjusted for inflation) can be expected to grow about 2.8 percent in 1997 and about 1.2 percent in 1998. For 1997, that's up from the September forecast of 1.8 percent growth for 1997. For 1998, the new forecast is down slightly from September's estimate of 1.8 percent.

-- Non-farm employment is expected to grow by 1.5 percent in 1997, down from September's forecast of 2.0 percent growth; and to grow by 0.4 percent in 1998, down from September's forecast of 1.3 percent.

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

Ingram says that the Institute's model also predicts 3.4 percent growth in state tax revenue for fiscal year 1998, which is slightly higher than the official forecast of 2.6 percent.

The lower figures represent the effects of both state and federal tax cuts enacted in 1997.

The state's Revenue Forecasting Conference will meet later in the month to consider whether to change the official estimate for revenue growth.


EDITORS NOTE: Beth Ingram, director of the University of Iowa Institute for Economic Research, will be in Des Moines today (Nov. 13) to present the Iowa Economic Forecast to the Iowa Economic Forecasting Council. If you'd like comments on the report, contact Charles H. Whiteman, chair of the UI department of economics and former director of the Institute, at (319) 335-0831; or (319) 335-0834.