Nebraska was one of three states which saw its real (inflation adjusted) gross domestic product (GDP) shrink in the fourth quarter of 2021. While the U.S. economy overall grew at a rate of 6.9 percent during the fourth quarter, Nebraska’s GDP shrank 0.8 percent, equaling just over $154 billion according to the U.S. Bureau of Economic Analysis (BEA). Iowa and North Dakota were the only other states which also experienced fourth quarter declines in their economies. Nebraska’s last quarter with growth in real GDP was the first quarter of last year when it experienced a real growth rate of 9.4 percent. Since then, Nebraska experienced declines in the second and fourth quarters and zero growth in the third quarter.
Agriculture was a leading contributor to the decrease in real GDP in Nebraska in the fourth quarter, contributing -5.9 percent. In other words, agriculture was a negative drag on the economy. Utilities and construction also showed negative contributions to Nebraska GDP while wholesale trade and nondurable goods manufacturing were the largest positive contributors.
Nebraska’s first quarter growth last year, though, was enough to place the state in the middle of the pack among states in terms of annual GDP growth. Nebraska’s growth rate, 5.3 percent, ranked 22nd among all states (Figure 1). Growth rates ranged from 0.3 percent in Alaska to 8.6 percent in Tennessee. Among bordering states, only Iowa and Colorado had higher real GDP growth last year compared to Nebraska. The U.S. had a growth in real GDP of 5.7 percent.
Figure 1. Annual Percent Change in Real GDP, 2020-2021
Data from the UNL Bureau of Business Research (BBR) shows Nebraska’s economy was soft in March. The monthly BBR Coincident Economic Indicator fell by 0.27 percent, indicating a shrinking economy. Of the four components which make up the Indicator, two fell, electricity sales and real private wages, and two rose, agricultural commodity prices and business conditions. Over the last six months, the index has shown mixed economic growth—rising in four months and declining in two months. On a positive note, the BBR’s Leading Economic Indicator, designed to predict growth six months into the future, rose by 0.89 percent in March, suggesting moderate growth for Nebraska’s economy in six months.