The Bureau of Economic Analysis (BEA) reports Nebraska’s inflation-adjusted gross domestic product (GDP) declined 2.4 percent during the first quarter of 2022. The rate put Nebraska behind 34 other states in terms of GDP growth. The first quarter decline marked the fourth consecutive quarter the state has either seen negative or zero GDP growth beginning with the second quarter of last year. Agriculture delivered the largest positive contribution to the state’s GDP during the first quarter, but it was offset by declines in non-durable goods manufacturing, retail trade, transportation, warehousing, and finance and insurance. Other sectors delivering positive growth were construction, information, real estate, and health care.
Figure 2. Annual Percent Change in Real GDP: 1st Quarter
Figure 3. Nebraska Unemployment Rate
While GDP growth has faltered, the state’s unemployment rate continues to run below 2 percent, one of the lowest in the nation (Figure 3). The Kansas City Federal Reserve Bank reports non-farm employment grew at an average rate of 2 percent last year and the growth has continued into 2022. In June, total non-farm employment was 1.03 million, only 3,000 short of pre-pandemic levels. Plus, the average number of job openings during the first quarter was 40 percent higher than the first quarter of 2021. And Nebraska continues to have one of the nation’s higher labor force participation rates at nearly 70 percent.
Nebraska’s economy is sending mixed signals. On the one hand, inflation, higher interest rates, and slower growth point to tougher times. On the other hand, the unemployment rate, job growth, and labor participation rate point to growth. The state and national economies both seem to be hovering, trying to decide whether to move higher or lower and economists are at a loss to predict which way they will go—if only economists had a third hand.