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Release: July 7, 1999

UI report predicts continued economic growth for Iowa in 1999-2000

IOWA CITY, Iowa — In its June Iowa Economic Forecast, the University of Iowa Institute for Economic Research is predicting continued economic growth for Iowa in the coming year.

According to the Iowa Economic Forecast released at the Iowa Economic Forecasting Council meeting in Des Moines, personal income growth in 1999 will be higher than expected -- 4.7 percent, compared to 2.8 percent in the March forecast. The expectation for 2000 is a 2.9 percent increase in 2000, compared to 2.6 percent in the March forecast.

"Taken as a whole, the forecasts indicate that the outlook for the Iowa economy in 1999 and 2000 is similar to that of the national economy. However, in contrast to our March forecast, we now expect real income in Iowa to grow at a slightly faster rate than national real income," said Institute director Beth Ingram, UI associate professor of economics.

The forecast incorporates a 33 percent decline in farm income in 1998. Farm income is expected to decline in 1999, decreasing by 2 percent over 1998. However, Ingram cautioned that these predictions about farm income are subject to much uncertainty.

The Institute also maintained its bright employment forecast for Iowa, with employment growth at 1.8 percent in 1999, .8 percent in 2000, and .7 percent in 2001.

The service sector and retail trade are the twin sources of both the highest levels and highest growth rates of employment in Iowa. Service sector employment is expected to grow by 2.8 percent in 1999 and by 3.2 percent in 2000. Retail trade employment is expected to grow by 2.2 percent in 1999 and by 1 percent in 2000.

Growth in wholesale trade employment will remain at 1 percent over the next two years. Growth in durable goods manufacturing employment is expected to be slow (0.8 percent in 1999, 0.3 percent in 2000), while non-durable goods manufacturing employment is expected to decline by 0.6 percent in 2000.

For more information, contact Ingram at (319) 335-0897, or Charles H. Whiteman, chair of the UI department of economics and former director of the Institute, at (319) 335-0831.