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Release: Dec. 6, 2002
Iowa Economic Forecast projects 1.8 percent state income growth in 2002
In its latest Iowa Economic Forecast, the University of Iowa Institute for
Economic Research expects real income growth of 1.8 percent in 2002, up slightly
from a forecast of 1.4 percent in September.
Beth Ingram, Institute director and UI professor of economics, said the
forecast is based on state income data through the second quarter of 2002.
Real income growth for 2003 is expected to be 2.6 percent in 2003, down from
2.7 percent forecasted in September.
Revenue growth for the current fiscal year, FY03, stands at 1.6 percent.
The Institute is forecasting a growth rate of 2.1 percent for state tax revenue
in the current year, followed by 1 percent revenue growth in FY 2004 and 1.6
percent in 2005.
In Iowa, Ingram notes that the recession is indicated by a slowing in the
growth rate of nominal income from approximately 5 percent to approximately
3 percent. The Institute forecast is for a return, over the period of 2003
2007, to a nominal income growth rate of approximately 4 percent.
Ingram pointed to two factors that explain the slowdown in revenue growth:
the decline in growth of nominal income over the course of the recession,
and a shift in the relationship between tax revenue growth and income growth.
"As Iowa income improves over the next year, tax revenue growth is
expected to rise. However, revenue growth is not expected to return to the
levels observed in the 1990s. In the current forecast, nominal income growth
of 4 percent is expected to produce revenue growth in the 1.5 to 2 percent
range," she said. For a chart of the income/revenue data, see the Institute's
website at http://www.biz.uiowa.edu/econ/econinst/.
The Institute's forecast also anticipates a decline of employment growth
in Iowa in 2002 of 0.5 percent (-.5 percent growth), but rising by 1.3 percent
The Institute submitted the report to the Iowa Economic Forecasting Council
and the Revenue Estimating Conference; the Revenue Estimating Conference meets
today (Dec. 6) in Des Moines. For more information, contact Ingram at (319)
335-0897, or firstname.lastname@example.org.