Nebraska Economy Stumbles in First Quarter . . .

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The Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce reported Nebraska’s gross domestic product (GDP) shrunk 4 percent in the first quarter of 2017 compared to the fourth quarter of 2016.  Nebraska had the worst first quarter economic performance of any state. The BEA attributed the dismal economic performance to the slumping agricultural sector.  Other plains states, also dominated by agriculture, saw their economies shrink in the first quarter as well.  Iowa’s economy contracted 3.2 percent; South Dakota’s fell 3.8 percent; and Kansas fell 0.7 percent.  Texas saw the greatest first quarter growth at 3.9 over the fourth quarter.  The country as a whole saw real GDP increase 1.2 percent in the first quarter, and the BEA’s first estimates real GDP growth for the second quarter at 2.6 percent.

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Not all the news on the economic front was bad for Nebraska. Governor Ricketts and the Nebraska Dept. of Labor announced Nebraska’s monthly increase in non-farm employment in June was 0.6 percent, the third highest in the nation.  Nebraska’s non-farm employment in June reached 1.031 million jobs.  Also, the Bureau of Business Research at the University of Nebraska-Lincoln reported that its most recent leading economic indicator predicts rapid economic growth later this year.  The indicator is a composite of economic factors like building permits for single-family homes, airline passenger counts, manufacturing hours, and the value of the dollar.  All components of the indicator rose in June, resulting in an increase in the economic indicator of 2.75 percent, suggesting a rapidly growing Nebraska economy at the end of the year.

Nebraska’s agricultural economy will continue to struggle in 2017.  The most recent projection indicates 2017 net farm income will fall 16 percent, the fourth consecutive year net farm income will have fallen.  Thus, agriculture will continue to dampen the state’s economic growth.  The first quarter numbers are surely evidence of this fact.  However, it appears the non-farm economy is picking up steam, offsetting the agriculture slump which should help the state post modest economic growth soon.


Jay RempeJay Rempe is the senior economist for Nebraska Farm Bureau. Rempe’s background in agricultural economics, years of experience in advocating at the state capitol, and firm grasp of issues allow him to quantify the fiscal impact of a regulatory proposal, and provide in-depth examination of key issues affecting Nebraska’s farmers and ranchers.

Declining Ag Economy Will Pose Challenges for Nebraskans

steve corn head shotIn Nebraska, there’s a telltale sign that we’re transitioning from summer to fall. It’s the dramatic change that happens on Saturday’s when no matter where you go in the state, you start seeing plenty of scarlet and cream. The University of Nebraska and Husker athletics, like the weather, is something you can strike up a conversation with virtually anyone. It connects many of us no matter where you live or what you do for a living.

While the relationship between Nebraskans and Husker athletics is apparent, there’s something else that connects Nebraskans as well; agriculture. On its face, the connection might not seem as obvious, but if you dig a little deeper, the connection is abundantly clear.

While only three percent of Nebraskans identify themselves as farmers and ranchers, the end product of their efforts in producing crops and livestock translates into creating jobs for one out of every four Nebraskans.

A study released by the University of Nebraska in 2012 leaves little question about agriculture’s connection and importance, whether you’re more likely to drive to work on six lanes of pavement or drive cattle down a gravel road.

To quote the study which looked at 2010 numbers to evaluate agriculture’s importance, “The combined direct and indirect effects of the agricultural production complex on Nebraska’s economy are considerable. In short, more than a fourth of the Nebraska’s economy can be attributed to the agricultural production complex.”

The study goes on to point out that, “While the nation’s economy was hit by the Great Recession followed by years of anemic recovery, this state’s economy has fared much better than most, in large part due to the prosperity within its agricultural sectors.”

The take away message from the report is simple. When Nebraska agriculture does well, so do Nebraskans. It was Nebraska’s connection to the agriculture that helped Nebraska families work through one of the lowest economic points in our nation’s history. And while agriculture had been riding a wave of momentum, things have changed.

Since 2013, the agriculture economy has done an abrupt about face. In Aug. USDA put out its projects for net farm income for 2015. The projections for farm income reflect a 50 percent decline in farm income over the last two years. It’s the equivalent of someone walking into their place of work and finding their salary or per-hour wage has been cut in half.

The transition in the agriculture economy will have broader ramifications for the state and the people and families who live here. Farmers and ranchers, while small in number, serve as the ignition point for the state’s economic activity. The ripple effect is already being felt. In late Aug. CNH Industrial America, which manufactures agriculture combines in Grand Island, reduced its workforce by 70 employees. That comes on the heels of cutting 136 jobs in February and 230 positions in August of 2014.

The loss of purchasing power by farmers and ranchers will trickle down and be felt across the state. The connection between agriculture and Nebraska’s economy is just that strong. That’s why Nebraska Farm Bureau continues to advocate for policies to keep a vibrant ag economy, whether that’s working to address a property tax burden that is threatening the viability of farms and ranches or pushing back on needless regulations that stifle growth opportunities.

At the end of the day, all Nebraskans have a connection to agriculture; and the connection isn’t just limited to the food on our plates.


Until next month,

Steve Nelson, President, Nebraska Farm Bureau Federation