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Release: July 16, 2001

Iowa Economic Forecast projects 2 percent income growth for 2001

IOWA CITY, Iowa -- In its latest Iowa Economic Forecast, the University of Iowa Institute for Economic Research predicts real personal income growth in Iowa will increase by 2 percent in 2001, down from a 3 percent estimate in March.

This forecast is based on state income data through the fourth quarter of 2000 and national income data through the first quarter of 2001, said Beth Ingram, Institute director and UI professor of economics. The Institute released its report today (Monday, July 16) at the Iowa Economic Forecasting Council meeting in Des Moines.

Ingram said the fourth quarter was especially weak in Iowa; real personal income grew at an annual rate of 1.1 percent, in line with the national growth rate.

"We expect this to pick up during the first quarter of 2001, but be followed by two weak quarters in which real personal income is expected to grow by 1.7 percent in the second quarter of 2001 and decline by 0.2 percent in the third quarter of 2001," Ingram said. "The national economic forecasters are saying the economy is skating on thin ice -- we're not in a recession right now, but the future is very uncertain."

State revenue growth is expected to be 2.8 percent fiscal year 2001, down from 3.7 percent from the March forecast. The revenue growth projection for fiscal year 2002 is 5.3 percent, down from 5.5 percent in the March forecast.

The Institute is forecasting no growth in employment this year, noting a .03 percent decline for 2001 but a 2.0 percent increase for 2002.