April 17, 2014

State economy expected to grow, despite expected drop in farm income

Economic growth is expected to continue in Nebraska, despite an anticipated drop in farm income.

The Nebraska Business Forecast Council predicts farm income to drop from record highs in 2011, but doesn’t expect that to slow steady state economic growth.

University of Nebraska-Lincoln Bureau of Business Research Director Eric Thompson, a member of the council, says it sees steady job growth as well.

“Very broad-based growth; most industries, most sectors will be expanding, adding employment,” Thompson tells Nebraska Radio Network affiliate KLIN. “(Nebraska) should have decent growth and income and taxable sales as well.”

While the economy continues to grow, personal income might slide back a bit on a technical adjustment. The temporary cut in the Social Security tax expired at the beginning of the year, cutting into take-home pay.

The service sector is leading state economic growth. The Business Forecast Council predicts broad growth among services through 2015, adding between 7,600 and 9,300 jobs per year.

Housing continues to recover in Nebraska. The council expects building permits and housing starts to keep climbing the next two years. Large commercial projects in Lincoln should be winding down, with road construction expected to pick up some of the slack. The council forecast construction jobs to grow by 3.5%, about 1,500 jobs, in 2013 with growth of 4% expected in 2014 and 2015, adding another 1,800 jobs each year.

Farm income rose to new heights two years ago. Though it has been edging off those highs, Thompson warns against placing too much emphasis on the expected drop in farm income.

“While we’re declining a little bit after that peak year of 2011, it’s still fair to say that our farm economy has become much stronger in recent years and it’s still a positive for our state’s economy.”

The council expects farm income to hold fairly steady at $5 billion annually.

Foreign investment is expected to spur steady growth in the food processing industry.