August 2, 2014

A slight dip in July’s Business Conditions Index

The Mid-America Business Conditions Index for the month of July slipped a bit for the Midwestern Region. CreightonUniversity Economist Ernie Goss says his monthly economic survey shows July came in at 57 compared to June’s 60.6 – a 3% drop. Goss says that is still above 50 which show there is still economic growth.

The employment index for July fell to 53.8 – down from June’s two-year high of 61.4. The average weekly earnings for the region expanded by only 1.3% over the past 12 months. Goss says Nebraska’s Business Conditions Index for July rose to a solid 55.5.

The July report also shows the prices-paid index which tracks the cost of raw materials and supplies declined to 67.7 in July from June’s 73.5. Inflationary pressures at the wholesale level have cooled a bit but remain elevated from the same time last year.

Goss says the July business confidence index slipped to 60 compared to June’s 63.6. He says “Despite growing global tensions, improvements in the national and regional job market supported supply managers’ business outlook.”

The inventory index declined to 51.3 in July from June’s 54. New export orders slipped to 57.5 from June’s 60.2. The report also shows new orders for July came in at 61.5, down from June’s 67.2 and production or sales dropped to 65 in July compared to 66 in June.  

For the seventh straight month Nebraska’s overall Business Conditions Index remained above 50. July came in at 55.5 compared to June’s 55.2.   New orders for Nebraska came in at 60.1, production or sales at 61.8, inventories at 53.2 and employment at 50.3. Weekly wages for Nebraska workers advanced by 2% over the past 12 months but unfortunately that is the same rate as inflation.

Nebraska ranks 10th overall in Kids Count report

Nebraska placed 10th overall in the latest Kids Count report.

Chrissy Tonkinson, research coordinator with Voices for Children in Nebraska, says that is two points lower than last year’s ranking.

They look at four categories that include economy, education, health and family & community.

Tonkinson says Nebraska’s education and health scores are up but there are worrisome trends in child poverty scores. In Nebraska, 18% of children live in poverty, up from 15% in 2005. The number of children living in high poverty areas increased to 7%, more than doubling since 2000. The percentage of children living in single parent families is up significantly – 35% in 2012 compared to 25% in 1990.

This report shows that parents are working hard but there is an upward trend in child poverty numbers that is troubling. Those numbers show families are not able to earn enough to meet all of their child’s basic needs without assistance. This kind of economic insecurity could have enormous consequences.

Education and health categories show improvement. Nebraska has seen a reduction in the number of children not attending preschool and math and reading proficiency scores are good. Nebraska also saw improvements in the number of low-birth weight babies and the number of children without health insurance is on the decline.

Johanns asserts 6.1% unemployment rate doesn’t reflect reality (AUDIO)

Sen. Mike Johanns has questioned the Federal Reserve chairwoman on whether she is satisfied with the progress on the federal unemployment rate.

Johanns, during a Senate Banking Committee hearing, told Federal Reserve Chairwoman Janet Yellen that while a 6.1% percent unemployment rate looks impressive, only about 63% of Americans are actually in the labor market.

“We haven’t seen those kinds of numbers since Jimmy Carter was president,” Johanns told Yellen.

Johanns asserted the unemployment rate’s decline doesn’t reflect the reality that many Americans have become discouraged and have dropped out of the labor market. Others, according to Johanns, have been forced into part-time jobs often working two or three to try to make ends meet.

Yellen agreed, in part.

The Federal Reserve chairwoman told Johanns some of the drop in labor market participation has to do with demographics. In particular, as the country’s population has aged, more and more people leave the labor force.

Still, Yellen said there are discouraged workers out there. She predicted they would return to the labor force as the economy continues to improve. The influx of more workers will keep the unemployment rate from dropping as it has recently.

Yellen denied the Fed is satisfied with a 6.5% unemployment rate.

“So, that’s never been our target and 6.1% is not our target either,” Yellen replied to Johanns.

The Fed has been keeping interest rates extremely low and propping up the economy through its monthly bond-buying stimulus program.

Johanns praised Yellen for reducing the purchases, but expressed concern that the Federal Reserve purchases have grown to $4.4 trillion.

Yellen said that if the labor market shows improvement into the fall and inflation stays in check, the Fed would likely end the stimulus program in October.

AUDIO:  Brent Martin reports [:45]

Interim NU President Touts Competitiveness Initiative in Advance of Budget

A $20 million economic competitiveness initiative is part of a University of Nebraska budget proposal, driven by continued economic development.

Interim President Dr. James Linder notes that the university is taking a long term view of future budgets and where the university can excel to meet those needs.

“They are all large complex programs–Innovation Campus, Peter Kiewit, and other long term programs,” according to Dr. Linder. “It’s not as if we’re going to invest a dollar today and see a return on it tomorrow.”

“These are programs which will benefit the state over the next decade.”

Dr. Linder notes that the university must continue to conduct cutting edge research and be at the forefront of new developments.

“We live in a dynamic world and we constantly face competition from both other states and globally,” Linder says. “Activities like the Nebraska Innovation Campus, Peter Kiewit Institute, and Rural Futures Initiative help us compete on a global scale.”

Areas of proposed investment include supporting the relocation of UNL’s Department of Food Science and Technology to Innovation Campus. The NU budget proposal will next be taken to the Board of Regents before going to the governor and legislature for passage.

Nebraska Economy Remains Strong According to Survey

After a couple of phenomenal years, Nebraska’s economy will slow enough in the next three years for the rest of the nation to catch up. University of Nebraska-Lincoln Bureau of Business Research Director Eric Thompson says it will be a bounce back time for the national economy, with Nebraska not having as far to bounce back.

“I think what’s happening is that over the last four or five years, the Nebraska economy has been stronger than the national economy,” Thompson notes. “This is going to be a big bounce back year for the national economy.”

Therefore, the growth of Nebraska’s economy will be a bit more measured according to Thompson.

“That’s partly related to our slower population growth. Our population growth in Nebraska does lag behind national growth,” Thompson says. “As a result, that’s going to lead to slower growth of the economy in Nebraska versus the national numbers.”

Thompson says job growth has stalled in the transportation sector, a major driver for the Nebraska economy. Growth in retail sales is expected to be strong enough to fuel an increase in retail jobs.