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Economic Forecast Projects 1.4 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 1.4 percent in 2002, down from a forecast of 1.9 percent in November.

Beth Ingram, Institute director and UI professor of economics said the forecast is based on state income data through the third quarter of 2001 and national income data through the fourth quarter of 2001. Ingram noted that the third quarter of 2001 was stronger than the Institute initially forecast, with actual real growth being at 1.9 percent compared to a forecast of 0.4 percent growth.

"The recession appears to be more shallow than we initially expected it to be, as state income growth has been more resilient than we might have expected," Ingram said. "But the real surprise is how low revenue growth is relative to income growth."

As of Feb. 5, actual state revenue stood at --.6 percent. The Institute's revenue forecast, based on data adjusted for both processing days and payments issues, is .2 percent growth in fiscal year 2002, down from 3.7 percent in its November forecast.

The Institute expects employment to decline by .15 percent in 2002 before rising by 1.9 percent in 2003. Previous employment forecasts for 2002 were more optimistic, with the November forecasts expecting growth of .6 percent, down from 1.5 percent growth in September.

The Institute released its report today (Friday, Feb. 15) at the Iowa Economic Forecasting Council meeting in Des Moines. Ingram can be reached at 335-0897, 330-5170 (cell) or beth-ingram@uiowa.edu.


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