Nebraska enjoys an economy that is the envy of most states, but pockets of problems persist.
An analysis by the Federal Reserve Bank of Kansas City shows a growing disparity between urban and rural Nebraska, caused by falling commodity prices since 2013.
Regional Economist Nathan Kauffman says Omaha and Lincoln have grown modestly since the Great Recession with rural Nebraska falling behind.
Kauffman says overall economic growth will help only somewhat.
“Broad gains in the economy can spill over into those areas, but may not necessarily completely change the relative disparities that we see that still exist,” Kauffman tells Nebraska Radio Network.
The agricultural economy has softened, according to Kauffman, since 2013 and continues to weaken further.
Agriculture enjoyed strong economic growth from 2006 through 2012. Kauffman credits two sources for the good times: an expanding biofuels industry combined with expanding trade.
Commodity prices, though, began faltering in 2013 and have yet to recover.
Kauffman says that hurts not just the farmer and rancher, but the businesses which serve them; all combining for a weakening rural economy.
Trade could help rural Nebraska, according to Kauffman, who points out Canada, Mexico, Japan, and China buy 65% of Nebraska’s exports.
“It’s where we’ve seen a lot of the growth, especially in agriculture,” Kauffman says. “We know there has been growth in meat processing and other areas that’s been driven by demand from other countries alongside rising incomes in China or East Asia more generally.”
Kauffman says trade policy has always had significance for Nebraska.
There is a side note to the Federal Reserve study of the Nebraska economy. The disparity in the state economy isn’t just between the metro and the rural areas. Some aspects of metropolitan Nebraska haven’t shared in the general growth enjoyed in Omaha and Lincoln.
The study points out the unemployment rate in northeastern Douglas County, the Omaha metro area, rose beyond 16% in 2011, more than three times the statewide unemployment rate. Northern Lancaster County, within an expanded Lincoln metro area, continues to lag behind the rest of that county.
AUDIO: Brent Martin reports [:50]