Nebraska Economic Growth Falters
The Bureau of Economic Analysis (BEA) reports Nebraska’s inflation-adjusted gross domestic product (GDP) declined 1.7 percent during the second quarter of the year (Figure 1). The rate put Nebraska behind 34 other states in terms of GDP growth. Texas had the highest growth rate at 1.8 percent and Wyoming had the lowest at -1.8 percent. The not so good news for the Nebraska economy, though, could change. BEA’s first estimate of Nebraska GDP growth in the first quarter showed a decline of 2.4 percent. However, revisions now show a growth of 5 percent. So, the second quarter figures could be revised. Agriculture delivered the largest contribution to state GDP in the second quarter followed by finance/insurance services and health care/social services. Sectors with declines included utilities, non-durable goods manufacturing, construction, and wholesale trade.
Figure 1. Annual Percent Change in Real GDP: 2nd Quarter
Source: Bureau of Economic Analysis
Figure 2. Annual Percent Change in Personal Income
Source: Bureau of Economic Analysis
Despite the dismal GDP growth, there is positive news for the state’s economy. BEA reports the state’s personal income rose 8.5 percent in the second quarter building on the 9.5 percent growth rate in the first quarter (Figure 2). Nebraska ranked fifth among states in personal income growth. North Dakota and South Dakota were ranked first and second respectively. Farm income contributed the most to the state’s earnings growth with health care a distant second.
Nebraska’s unemployment rate continues to remain one of the lowest in the nation. The Kansas City Federal Reserve Bank (Tenth District) says Nebraska’s unemployment rate was 2.2 percent in September, lowest in the Tenth District and fourth lowest in the nation. Nonfarm payroll grew 2.6 percent in September year-over-year, while positive it was below the overall rate in the Tenth District of 3 percent. However, growth has been brisk enough that earlier this year jobs in the state exceeded pre-pandemic levels. Employment in August was 0.2 percent higher compared with August 2019. Not every sector has seen jobs exceed pre-pandemic levels. Trade, transportation, utilities, and financial sectors have yet to return to 2019 levels. In contrast, the food manufacturing and construction sectors added jobs during the pandemic. Not all regions in Nebraska have seen job growth either. Between 2012-2019 job growth in metro Nebraska was 10 percent while it was just 0.3 percent in nonmetro areas. Since 2019, though, the gap between metro and nonmetro areas has narrowed to 8.3 percent.
The Nebraska economy, like the U.S. economy, is exhibiting signs of both growth and decline. What signs of growth exist is being fueled partly by agriculture. Agriculture currently stands in strong financial condition, but questions are aplenty on what 2023 will bring. No doubt, agriculture’s fate in 2023 will partially determine the fate of the overall Nebraska economy.
