CONTACT: SCOTT HAUSER
100 Old Public Library
Iowa City IA 52242
(319) 384-0007; fax (319) 384-0024
UI report predicts moderate growth in Iowa economy for 1998, 1999
IOWA CITY, Iowa -- Iowans will see moderate growth in their purchasing
power for the rest of 1998 and into 1999, while employment prospects brighten
in the coming year, according to the Iowa Economic Forecast released today
(April 2) by the University of Iowa Institute for Economic Research.
Beth Ingram, director of the Institute, said the figures indicate real
personal income (that is, adjusted for inflation) will continue to go up
in the coming 21 months, but the trend is not quite as steep as it was
"Real income will not grow as quickly in 1998 as it did in 1997,"
Ingram said. "However, real income is still rising, augmented by historically
low rates of inflation."
The report was prepared for today's meeting of the Iowa Economic Forecasting
Council in Des Moines. Ingram chairs the council.
According to the report:
-- Real personal income, or the purchasing power of Iowans' incomes
when inflation is taken into account, can be expected to grow about 1.8
percent in 1998 and about 1.5 percent in 1999. For 1997, real personal
income grew about 2.8 percent. For 1998, the new estimate is up from an
estimate of 1.2 percent growth made in November 1997.
-- Higher growth in income is expected for the first quarter of 1998,
while the remaining three quarters are expected to enjoy steady growth
in the range of 1.5 percent to 1.8 percent.
-- Non-farm employment is expected to grow by 1.4 percent in 1998, compared
to a November forecast of 0.4 percent, and to grow by 0.4 percent in 1999.
-- Most employment growth will be in the service sector of the economy,
which is expected to experience a 3 percent increase in employment in 1998
and a 2.8 percent increase in 1999, followed by durable goods manufacturing
and retail trade.
Ingram also said the Institute's model predicts that fiscal year 1998
growth in state tax revenue is likely to be around 4.6 percent, which is
slightly higher than the official forecast of 2.9 percent. Early forecasts
of revenue growth for 1999 indicate a lower growth rate of 1.8 percent.
The lower figures represent the effects of both state and federal tax
cuts enacted during 1997. Ingram cautioned that large uncertainties remain
in the revenue forecasts.
The state's Revenue Estimating Conference will meet later in the month
to consider whether to change the official estimate.
EDITORS NOTE: Beth Ingram, director of the University of Iowa Institute
for Economic Research, will be in Des Moines today (April 2) to present the
Iowa Economic Forecast to the Iowa Economic Forecasting Council. If you'd
like comments on the report today, contact Charles H. Whiteman, chair of the
UI department of economics and former director of the Institute, at (319)
335-0831. Otherwise, you can reach Ingram at (319) 335-0897.