Forecasters: State's economy strengthens, poised for rapid growth

Released on 02/16/2011, at 2:00 AM
Office of University Communications
University of Nebraska–Lincoln
Lincoln, Neb., February 16th, 2011 —

The state's economy will grow steadily this year and rapidly in 2012, adding jobs in nearly every sector and likely pushing Nebraska's average per-capita personal income past the national average for the first time in decades, economic forecasters said.

In its latest report, the Nebraska Business Forecast Council predicted solid increases in employment and personal income in the state over the next 10 months -- growth that should accelerate even faster in 2012.

The expansion will be powered by record farm incomes and strong growth in Nebraska's other industries, forecasters said.

"As the Nebraska economy has outperformed the national economy during the recent recession, the state has largely closed a long-term gap in per-capita income," the council noted in the report, published through the University of Nebraska-Lincoln's Bureau of Business Research. "It is likely that Nebraska per-capita incomes will rise above the national average during 2011 or 2012."

Eric Thompson, the bureau's director, said per-capita income in Nebraska in 2009 stood at $39,277 -- or 99.1 percent of the national average.

"This is a significant milestone for the Nebraska economy," Thompson said. "It underscores the progress that the state's economy has been making over the last decade, even as the state continues to work through the consequences of the recent global recession."

Farm incomes soared to a record $4.25 billion in 2010 and are poised to maintain that high level -- rising another 5.9 percent to $4.5 billion in 2011 before dipping back slightly in 2012, to $4.3 billion.

The confident outlook for agriculture is due in part to rising incomes in the developing world, the falling dollar and crop production shortfalls in other parts of the globe. Such macroeconomic factors should continue for several years into the future, forecasters said, and should keep Nebraska farm incomes at or near 2010 levels through 2012 at the very least.

Non-farm personal incomes should also see jumps of 5 percent in 2011 and 5.2 percent in 2012. That's more ambitious than the council's July 2010 forecast, which projected 3.8 percent increases over both years. Employment in the state, meanwhile, should reach pre-recession levels by mid-2012.

Other segment-specific forecasts in the latest report:

* Nebraska's vast services sector, which makes up 38 percent of the state's employment and includes large industries like health care, professional and scientific jobs, and arts, recreation and entertainment businesses, will see 2.2 percent employment growth in 2011 and 2.4 percent in 2012, or about 8,000 jobs each year. That's about half of the expected job growth in both years, meaning services will continue to make up a larger share of the state's employment picture.

* Financial services, a segment that includes finance, real estate and insurance, should see employment gains of 1.5 and 2.5 percent in the next two years, based on Nebraska's status as a national leader in the insurance industry and the fact it is home to several strong, growing regional banks.

* Nebraska's manufacturing activity, which is significantly influenced by the national and global agricultural sector, should increase thanks to a strong farm economy in addition to increased global demand for both non-durable and durable goods. Forecasters predict employment increases for durable goods to increase 2.3 and 2.1 percent. Non-durable goods activity, which did not fall as fast during the recession, will experience flat employment over the next two years.

The full report is available at the Bureau of Business Research website, http://bbr.unl.edu.

Members of the Nebraska Business Forecast Council in addition to Thompson are John Austin, Department of Economics, UNL; Chris Decker, Department of Economics, University of Nebraska at Omaha; Tom Doering, Nebraska Department of Economic Development; Ernie Goss, Department of Economics, Creighton University; Bruce Johnson, Department of Agricultural Economics, UNL; Ken Lemke, Nebraska Public Power District; Phil Baker, Nebraska Department of Labor; Franz Schwarz, Nebraska Department of Revenue; and Scott Strain, Greater Omaha Chamber of Commerce.

WRITER: Steve Smith, University Communications, (402) 472-4226

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