Long-Term Nebraska Economic Forecast: Construction Stronger, Agriculture Weaker
By Mike Tobias , Senior Producer, Nebraska Public Media
June 26, 2016, 8:18 a.m. ·
Construction will be the fastest growing sector of Nebraska’s economy through 2018. That’s one forecast from the new long-term economic forecast from the University of Nebraska-Lincoln Bureau of Business Research.
The report predicts that construction employment in Nebraska will reach a record level this year and continue to grow. More than 55,000 people will work in construction in Nebraska by 2018, an increase of 9.5 percent from 2007. The report said an infusion of state tax dollars for roads projects is one reason for growth in the construction sector.
Overall, the “Business in Nebraska” forecast predicts moderate growth for Nebraska’s economy through 2018.
Agriculture and machinery manufacturing are expected to be weak spots in the state economy. After reaching a record $7.5 billion in 2011 and a near record in 2013, farm income dropped 39 percent in 2015 due to lower crop prices. With livestock prices also falling, farm income is projected to drop another 8.4 percent in 2016. Lower crop and livestock prices have placed pressure on the state’s machinery manufacturing industry.
“Lower crop and livestock prices have reduced farm profitability and the level of investment in farm machinery,” said economist Eric Thompson, director of the Bureau of Business Research. “Investment is unlikely to recover over the next few years given that farm profitability is expected to stabilize but not grow.”
Thompson said farm income is expected to bounce back in 2017. “In a more stable price environment, agricultural producers will be able to grow profits by increasing efficiency,” Thompson said.
The report said job growth in other economic sectors should push Nebraska paychecks higher. Nonfarm personal income is predicted to grow by four percent or more annually through 2018.
The forecast predicted more jobs also are on the horizon for health care workers, truck drivers and hotel staff. Health care, the largest component of Nebraska’s services industry, is expected to grow by up to two percent a year as Nebraska’s population grows older.
The long-term forecast, which is updated twice yearly, predicts economic growth three years into the future. Thompson developed the projections in consultation with the Nebraska Business Forecast Council, a group of economists who work for UNL, the University of Nebraska at Omaha, utilities and several state government agencies.
Read the full Business in Nebraska report at cba.unl.edu/outreach/bureau-of-business-research/