Iowa experiencing slow economic recovery

Iowa probably experienced the worst of the recession earlier this year and has begun what could be a slow, jobless recovery, a panel of economic experts said Monday.

“This is not a fast-paced recovery prediction,” said Charles Whiteman, interim director of the University of Iowa Institute for Economic Research and a member of the Governor's Council of Economic Advisors.

“It's a prediction that the trough of the cycle is behind us, that income is going to turn up here in the first quarter of 2010, and that employment is going to follow mid year,” he said.

“It's not a jump up and down, cheery kind of prediction,” he added. “We're going to turn, we're going to get out of this, it's going to be a modest recovery, but it's going to be a recovery and I think it's starting right now.”

Other panel members agreed that Iowa likely has been the bad economic times behind it but there were cautious that what improvements come will not necessarily involve a return of lost jobs or pre-recession wage levels.

Council member Karin Peterson said she believed Iowa had hit the recessionary bottom but she expected companies would hold off on refilling high-wage jobs and that any wage increases or expanded hours likely would be small.

Council member David Miller, director of research and commodity services for the Iowa Farm Bureau Foundation, said Iowa's agricultural sector was hit by price volatility and large, significant shifts in the farm economy that likely will mean more debt and delinquencies.

Council member Jon Muller, president of Muller Consulting, Inc., suggested the state might consider revamping its budgeting procedures by basing state spending on an average of previous years' tax collections.

But he noted no one could have predicted an unprecedented $500 million “collapse” in state revenues in recent months and if such an estimate was made, he doubted elected officials would have taken an extraordinary step to cut spending by 10 percent without first seeing some proof of a dramatic drop off in state receipts.

Gov. Chet Culver said Monday's discussion was a starting point for possibly formulating a new, improved method of budgeting and revenue estimating that was more formula driven. However, he doubted any proposed structural reforms would occur during the 2010 session unless a consensus developed in talks with lawmakers.

“I think we're still going through a really tough time. We're not out of the woods yet,” the governor said after the meeting. “I think there was a general feeling that we are slowly seeing signs of improvement and that's good news.”