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.
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 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.