The Nebraska Business Forecast Council expects manufacturing, construction, and services to lead economic growth.
Farm income is forecast to drop nearly 7% this year with a rebound expected in 2019 and 2020.
Bureau of Business Research Director Eric Thompson says a rebound in another sector will lead the expected growth.
“The key findings are we’re expecting stronger growth in the manufacturing sector than we’ve seen in about a decade,” Thompson tells Nebraska Radio Network affiliate KLIN. “So, the Nebraska manufacturing sector is doing better; good growth in manufacturing along with continued growth in construction.”
Residential construction will be strongest in Omaha and Lincoln, but construction is expected to be strong in Grand Island, Kearney, and Fremont as well. An increased demand for office space is expected to drive construction as well.
Road work should also be strong, financed by an increase in the gas tax. The construction industry is expected to add 3,200 jobs through 2020.
The long-term economic forecast is compiled by the Bureau of Business Research on the Lincoln campus and the Nebraska Business Forecast Council.
The forecast expects non-farm income to grow between 3.6% and 3.8% each of the next three years.
The manufacturing sector is expected to add 2,800 jobs in the next three years with non-durable goods manufacturing leading the way. Continued problems in the farm economy will hold back growth in durable goods manufacturing, according to the forecast.
The largest employer in Nebraska is the services sector. The forecast expects it to add between 4,800 and 6,100 jobs each of the next three years, more than half of the expected growth during the three-year period.
Economists expect agriculture to slug through another tough year this year with farm income dropping by as much as 6.7% before rebounding the next two years.
Thompson says retail will likely continue to see difficult times.
“Continued competition from online retailers, automation at retail businesses, and we’re seeing some closures in larger department stores in the state,” according to Thompson. “We’re not expecting growth in retail employment this year and kind of slow growth throughout the three-year period.”
One dark cloud hovers over the horizon of an otherwise bright economic outlook.
Thompson acknowledges the threat of a trade war could drastically change the forecast.
“If we did have large disruptions to trade, significant new restrictions on Nebraska’s agricultural products, large new tariffs in the U.S. which really are tax increases. You know that certainly could derail progress in the economy.”
Click here for more on the three-year economic forecast.
Jane Monnich, KLIN, contributed to this story.