Economic indicator predicts slow growth in mid-2017

Economic indicator predicts slow growth in mid-2017

Eric Thompson (second from right), associate professor of economics, works with student research assistants in the College of Business Administration’s Bureau of Business Research. The bureau is designed to assist with Nebraska’s economic development efforts.
Craig Chandler | University Communication
Eric Thompson (second from right), associate professor of economics, works with student research assistants in the College of Business Administration’s Bureau of Business Research. The bureau is designed to assist with Nebraska’s economic development efforts.

Nebraska's economic growth will slow during the second quarter of 2017, according to the latest leading economic indicator report from the University of Nebraska-Lincoln.

The indicator, a composite of economic factors that predict economic growth six months into the future, fell by 0.5 percent in December.

"The decline during December is the second consecutive monthly setback," said economist Eric Thompson, director of the Bureau of Business Research at the university. "Taken together with the decline in November, the December drop suggests that economic growth will be weak in Nebraska during the second quarter of 2017."

Initial claims for unemployment insurance and the value of the U.S. dollar both rose sharply during December, potentially negative signs for the Nebraska economy.

"A rising dollar is a drag on Nebraska's export-oriented businesses, such as agriculture and manufacturing," Thompson said. "The sharp increase in initial claims for unemployment insurance suggests a softening of the labor market."

However, three components of the indicator also rose during December. There was an increase in manufacturing hours, building permits for single-family homes and business expectations. In particular, respondents to the December Survey of Nebraska Business reported plans to increase both sales and employment over the next six months.

The leading economic indicator report is produced monthly by faculty and students in the Bureau of Business Research in Nebraska's College of Business Administration.

The full report and a technical report describing the indicators are available at the Bureau of Business Research website here.

UNL Bureau of Business Research Leading Economic Indicator Nebraska – January 2017
[VIDEO]: Eric Thompson discusses the December leading economic indicator report