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Release: Embargo until 2 p.m. March 25, 1999

UI report predicts moderate economic growth for Iowa in 1999

IOWA CITY, Iowa -- In its March Iowa Economic Forecast, the University of Iowa Institute for Economic Research is predicting a level of moderate income growth for Iowa in the coming year.

According to the Iowa Economic Forecast released today (March 25) at the Iowa Economic Forecasting Council meeting in Des Moines, income growth will continue to be moderate -- 2.8 percent in 1999 and 2.6 percent in 2000.

"Iowa's economy is still growing, but is not doing as well as the nation as a whole," said Institute director Beth Ingram, UI associate professor of economics.

Recent data indicate that Iowa posted a 2.2 percent increase in real personal income during 1998, about 0.3 percent lower than the Institute's November forecast for 1998. Slower-than-expected growth during the third quarter contributed to this decline, Ingram said.

The forecast incorporates a 27 percent decline in farm income in 1998. Farm income is expected to recover slightly in 1999, increasing by 15 percent over 1998, but this level would not offset the decline experienced in 1998. Farm income in 1999 would still be about 16 percent lower than the level of farm income in 1997. However, Ingram cautioned that these predictions about farm income are subject to much uncertainty.

The Institute also issued a bright employment forecast for Iowa, with employment growth set for 1.8 percent in 1999 compared to a November forecast of 0.5 percent growth.

The services sector will represent the most important source of employment growth in 1999, with an employment growth rate of 3.6 percent. The second leading sector for employment growth is expected to be retail trade (2.2 percent growth), followed by wholesale trade (1.7 percent growth). Employment growth in durable goods manufacturing will slacken to 0.6 percent growth, down from 3.9 percent in 1998. Although employment in non-durable goods manufacturing grew smartly in 1998, the Institute expects almost no growth in this sector in 1999.

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.