Oct. 3, 2008
UI economic forecaster expects Iowa to hold its own through 2009
Floods, foreclosures, market meltdowns and bankrupt banks will have minimal impact on the Iowa economy in the coming year, according to University of Iowa economic forecaster John Geweke.
In his quarterly report delivered to the state's Revenue Estimating Committee today, Geweke said he expects Iowans' personal income to increase by 5.3 percent in 2008 and 5 percent in 2009.
Employment growth, however, will not be as strong. He expects job growth in Iowa to increase by only .2 percent in 2008 and then shrink by .4 percent in 2009.
Geweke, director of the Institute for Economic Research in the Tippie College of Business, said the state's agriculture sector will continue to lead the economy, as prices for commodities remain high. The energy sector will also remain strong, with ethanol production and wind turbine manufacturing leading the way.
"Personal incomes remain strong because farm income and property income from farm rental continue have been increasing," Geweke said.
However, he said the problems affecting the national economy will soon reach Iowa and lead to an increase in unemployment next year. He said that if the credit markets don't loosen up in the next month and businesses have more access to cash, more job losses could result and unemployment could go higher than anticipated.
His forecast expects state tax revenues to remain steady through next year.
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.
STORY SOURCE: University of Iowa News Service, 300 Plaza Centre One, Suite 371, Iowa City, Iowa 52242-2500.
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