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Iowa Economic Forecast Projects 1.6 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 1.6 percent in 2002, up slightly from a forecast of 1.4 percent in February.

Beth Ingram, Institute director and UI professor of economics, said the forecast is based on state income data through the fourth quarter of 2001. The dip in income growth was not as severe in Iowa as it had been in the rest of the nation in 2001, she added.

The Institute is forecasting slow revenue growth for fiscal year 2002-03, followed by flat revenue in fiscal years 2004 and 2005. Revenue growth for fiscal year 2002 was -2.1 percent.

"Although revenue has historically had a positive growth rate, our model has picked up the zero growth rate experienced in 2000 and the negative growth rate experienced in 2002 and is generating an essentially no-growth forecast over the next two fiscal years," Ingram explained.

The Institute's forecast also anticipates flat employment growth in Iowa in 2002. Following on the heels of an employment decline of .8 percent in 2001, the Institute expects employment to decline by .5 percent in 2002 before rising by 1.4 percent in 2003. The February forecast predicted employment to decline by .15 percent in 2002 before rising by 1.9 percent in 2003.

The Institute released its report on Thursday, July 18, at the Iowa Economic Forecasting Council meeting in Des Moines.

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