July 8, 2008
UI forecaster sees continued growth in Iowa economy
State revenues and incomes should continue to rise through 2009 and hold off an economic recession in Iowa, according to University of Iowa economic forecaster John Geweke.
In his quarterly report delivered to the state's Revenue Estimating Committee on Monday, Geweke said he expects personal income to grow by 5.1 percent in 2008 and 4.9 percent in 2009. Those numbers are both revised upward from his April forecast of 4.7 percent in 2008 and 4.5 percent for 2009.
Employment growth is expected to increase by .4 percent in 2008, up from the April forecast of .1 percent, and increase by .1 percent in 2009, down from the .2 percent forecast in April.
"Income growth continued to strengthen through 2007 and the first two quarters of 2008, and the main driver of that is commodities prices that continue to go up," said Geweke, director of the Institute for Economic Research in the Tippie College of Business.
He said slow employment growth is one potential weakness in the state's economy, but it isn't slow enough to make him uncomfortable.
"Looking at these numbers, I see no threat of an impending recession in Iowa," he said.
Income projections are based on state figures from the first quarter of 2008. Revenue figures are based on data through the second quarter of 2008. While the projections do not fully account for damage sustained in the floods, tornados and storms that hit the state this spring, he doesn't expect those catastrophes will significantly slow the Iowa economy. Economic activity related to clean-up and rebuilding typically offset whatever economic loss was caused by the natural disasters, he said.
Geweke is a professor of economics in the Tippie College of Business and Harlan E. McGregor Chair in Economic Theory in the Department of Statistics and Actuarial Science in the College of Liberal Arts and Sciences.
The Institute for Economic Research serves Iowans as an advisory group to the Governor's Council of Economic Advisors. The council's discussions are, in turn, used by the state's Revenue Estimating Conference in determining the official prediction of the rate of growth of tax revenues for the coming two fiscal years. The Board of Regents created the institute in 1975 to facilitate cohesive and continuing economic research, and to establish a formal mechanism for providing interaction with, and economic research services to, government and industry. Each quarter the institute produces the Iowa Economic Forecast, which contains quantitative forecasts of economic conditions and tax revenues for the State of Iowa using the latest advances in econometrics.
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