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CONTACT: GEORGE McCRORY
100 Old Public Library
Iowa City IA 52242
(319) 384-0012; fax (319) 384-0024
e-mail: george-mccrory@uiowa.edu

Release: Immediate

UI report predicts moderate economic growth for Iowa in 1999

IOWA CITY, Iowa -- The University of Iowa Institute for Economic Research has issued a slight downward revision in its forecasts for Iowa's economic growth in 1998 and 1999, but is still predicting a level of moderate income growth for the coming year.

According to the Iowa Economic Forecast released today (Nov. 17) at the Iowa Economic Forecasting Council meeting in Des Moines, Iowa's real personal income growth for 1998 will increase approximately 2.5 percent, down from a 3.3 estimate in September. Real personal income, the purchasing power of Iowans' incomes when inflation is taken into account, is expected to accelerate at the end of 1998, which will carry forward into 1999.

"Real income growth is expected to be about 2.8 percent in 1999," said Institute director Beth Ingram, UI associate professor of economics. "This is slightly lower than what we predicted in September."

She explained that the downward revision in the forecast could be attributed to lower-than-anticipated income levels during the second and third quarters of this year.

Farm income is expected to slide again in 1999 with a forecasted decline of 12 percent from 1998 to 1999. "The situation in the farm sector is, as always, very uncertain," Ingram commented.

The forecast for non-farm employment growth in 1999 is 0.5 percent. Employment growth was positive across most sectors of the Iowa economy in 1998; the service sector is expected to provide the most important source of employment growth in 1999. Employment in the service sector is expected to expand by 32 percent in 1998, 2.9 percent in 1999 and 2.8 percent in 2000.

Durable goods manufacturing employment is expected to show more strength than previously thought with employment growing by 2.5 percent in 1998 and declining by only 0.3 percent in 1999. Employment growth in wholesale and retail trade is expected to remain positive into 1999 while employment in non-durable goods manufacturing is expected to decline by 1 percent.

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.

11/17/98