A University of Iowa economist says Iowa’s economy has bottomed out and Iowans’ personal income has started growing again. Charles Whiteman of the U-of-I’s Institute for Economic Research, is a member of the Governor’s Council of Economic Advisors.
“We turned up Iowa in personal income in terms of growth in the fourth quarters, but employment still hasn’t turned up, so we’re waiting for that,” Whiteman says. “Our forecast suggests that’s going to happen about mid-year. so we’re still losing jobs — not as rapidly as before — and we think that’ll turn around in the next few months.”
State tax collections — another economic indicator — were down about 6.5% in February compared to the same month a year ago. Whiteman says three months ago, he thought state tax receipts would have started growing by now because December was a pretty good month in terms of state tax collections, but January and February weren’t.
Whiteman predicts state tax collections won’t start growing again until the next state fiscal year, which starts in July. “I’m seeing the likelihood of a decline this year,” Whiteman says. “A rebound next year.” Whiteman made his comments earlier today during taping of this weekend’s edition of the Iowa Public Television program, “Iowa Press.”
Ernie Goss, a Creighton University economist, was the other guest on the program. Goss predicts state tax collections will be flat or down in the first half of 2010 and the uptick in the last half of the year won’t be enough to eclipse that. “I think we’re looking at 2010 still rough in terms of state tax collections, of course that’s income and sales tax primarily what we’re talking about. The outlook there is not good because I expect Iowa, for example, according to our surveys and certainly in urban areas to add jobs perhaps for this quarter,” Goss said.
“Very few jobs, though, so that’s not going to bump up state tax collections to any great degree.” Whiteman advises state policymakers to “keep their eye on the ball” and “facilitate” economic development. “I think we’re going to get through this. I can see the light at the end of the tunnel,” Whiteman said. “I think maybe it’s time to start beginning to think about what we’re going to do afterwards which is really the big question right now.”
Whiteman and other members of the Governor’s Council of Economic Advisors met this afternoon in the governor’s office. Next week, a three-member of financial experts will meet to set the official estimate of state tax revenue for the year. That number will be used by legislators who’re drafting a budget for the next state fiscal year which begins July 1st.