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Iowa Projected Revenues Up Again

December 6, 2010

As expected, the Iowa Revenue Estimating Conference are estimating higher state tax revenues for the current and next year than previously thought.

Last year, I predicted these revenue estimates would be underestimated. These models tend not to predict changes in the economy, so they tend to overestimate revenues during recessions and underestimate revenues during economic expansion.

Above is an updated graph comparing net tax revenues with the December projections. Notice that project tax revenues almost appear to be the exact copy of actual revenues–just shifted to the right. Projected revenues seem to be a better lagging indicator than predictor.

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