Long-Term Economic Forecast Positive for Nebraska
By Mike Tobias , Senior Producer, Nebraska Public Media and University of Nebraska-Lincoln News
Jan. 22, 2015, 10:17 a.m. ·
Modest but steady economic growth. That’s what Nebraska can expect during the next three years, according to a long-range forecast released today (Friday, Jan. 23) by the Bureau of Business Research at the University of Nebraska-Lincoln.
The forecast, produced in conjunction with the Nebraska Business Forecast Council, predicts Nebraska will add more than 32,000 jobs through 2017, a 1.1 percent annual increase.Many of the new jobs will come in the construction industry, with the forecasters predicting an upswing in new home construction, commercial construction and road construction.
Non-farm income is expected to grow by an average annual rate of about 3.98 percent, nearly double the rate of inflation.
However, the state’s grain farmers likely will see declining income as the agriculture sector re-balances from a record $8.4 billion income in 2013. Farm income dropped more than 36 percent in 2014, to about $5.3 billion, and is expected to continue to decline another seven percent in 2015, leveling off at about $4.8 billion to $4.9 billion in 2016 and 2017.
International economic shocks arising from China, Russia and Europe, combined with uncertainty about how and when the Federal Reserve will launch long-anticipated interest rate hikes, could hamper national economic growth through the first part of 2015. But the forecasters said the national economy should begin to accelerate in mid-2015, with the gross domestic product growing by about 2.6 percent a year in 2016 and 2017.
Recovery will be less robust in Nebraska, in part because declining farm income will limit rural job growth, but also because the state’s small population creates less need and capacity for quick job growth.
Other projections in the report:
- Construction is projected to be Nebraska’s fastest growing employment sector, with jobs increasing at a rate of three percent in 2015 and 2.5 percent each of the next two years. Construction currently provides more than 45,000 jobs in Nebraska and is expected to add more than 1,000 jobs a year in each of the next three years. New home construction is expected to increase, while a growing economy is expected to generate more commercial construction. Newly-earmarked state government funds should boost road construction.
- The services industry (currently Nebraska’s largest sector, employing more than 382,000 people in health care, hospitality, professional , scientific and other service fields) is expected to steadily grow at about 1.5 percent annually. The fastest growth is expected in the health care industry, particularly in doctor’s offices and clinics.
- In agriculture, grain farmers are expected to collect less income as a result of lower crop prices. However, livestock producers recently have benefited from lower feed costs and record prices for their animals because of shortages caused by drought. Lower livestock prices will contribute to a seven percent decline in farm income in 2015, thought the sector should stabilize at about $5 billion annual income in 2016 and 2017.
- With net taxable sales predicted to increase 4.7 to 4.8 percent per year through 2017, retail trade jobs are also expected to grow, although more slowly than sales. The sector, which currently employs nearly 110,000 people in the state, saw a decline in jobs during the past decade as retailers turned more to technology to reduce labor costs. Retail jobs are predicted to grow by one percent in 2015, and less than one percent in 2016 and 2017.
- Nebraska’s manufacturing sector faces two cross-cutting trends during the next three years. Reduced fuel costs should help boost domestic demand for goods and services, but a higher U.S. dollar will discourage exports. Nebraska factories also will continue to be hampered by a limited supply of skilled workers. The sector, which employs more than 44,000 people in manufacturing durable goods and more than 52,000 people in non-durable goods, is expected to add a few hundred more jobs each year.
- Strength in banking and real estate, which are bouncing back with the housing and construction industries, will add 700 to 900 jobs per year to the financial services sector. However, insurance industry employment, flat in recent years, will see slower improvement. The sector as a whole will approach 75,000 workers by 2017.
- Newspapers, media outlets and technology businesses will shed jobs as technology improves productivity. Forecasters predict 100 fewer people will be employed in the information sector in 2017. The sector now employs about 17,000 people in the state.