After a couple of red-hot years in the farm sector and in home construction, Nebraska’s economy will slow enough for the rest of the nation to catch up, state forecasters say.
In its latest forecast, the Nebraska Business Forecast Council predicts that Nebraska will see slower economic growth than the U.S. economy as a whole in the remaining months of 2014.
The U.S. economy is expected to grow by more than 3 percent before the end of the year, before moderating in 2015 and 2016.
But Nebraska will see stable farm income and comparatively small increases in nonfarm employment and income during that same time frame.
“Growth in Nebraska will lag growth in the nation over the next three years,” said Eric Thompson, associate professor of economics at UNL and director of the Bureau of Business Research, publisher of the semi-annual report. “This partly reflects slower underlying population growth in Nebraska and partly reflects that Nebraska’s labor market is stronger and less in need of recovery,” Thompson said.
National job growth has been stronger than expected in 2014. Though Nebraska’s employment growth will not be as strong – partly because its slow-growing population restricts its labor force.
Yet income growth should be strong enough for Nebraska to maintain its advantage in per-capita personal income – which was 3.3 percent higher than the national level in 2013.
While crop prices rose in early 2014, they remain significantly lower than the records seen in 2012. That has resulted in a more balanced agricultural sector, with crop prices high enough to provide significant return for growers, while allowing livestock producers to remain profitable.
“The situation represents something of a new normal for Nebraska agriculture,” the report says. “Main elements of the sector can operate near capacity and profitably at long-term prices for crops and livestock.”
Annual farm income is expected to exceed $5 billion in coming years, double the level of a decade ago. Farm income levels should forestall any major declines in the price of farmland, the forecaster said.
A recovery in home construction helped add more than 3,000 jobs to the construction sector since 2011. The job growth is expected to continue, though at a slower pace, with state and local government setting aside more dollars for road construction.
Manufacturers should continue to recover some of the 10,000 jobs lost during the Great Recession, thanks to growth in consumer purchases, stronger foreign demand and a thriving agriculture sector. However, Nebraska will continue to face a limited supply of skilled workers at prevailing wages.
Job growth has stalled in the transportation sector, long a major driver for the Nebraska economy. The trend reflects a shortage of qualified long-haul drivers and a slow recovery from the Great Recession.
The information industry – which includes newspapers and other media outlets, as well as data processing telecommunications and website development – is shedding jobs because of significant labor productivity increases.
Growth in retail sales is strong enough to fuel an increase in retail jobs. The sector has used automated inventory control, self-service checkout, online sales and big box stores to minimize its labor force.
The full report is available on the Bureau of Business Research website.