Lincoln (Neb.) - Dec. 21, 1999 - A tight Midwest labor market continues to slow economic growth in Nebraska, with the Nebraska Business Forecast Council predicting that the economy will fall "below potential" through 2001.
In its latest projection, the forecast council expected that jobs will continue to grow in Nebraska, but the rate of job growth will slow as labor markets in Nebraska and surrounding states continue to tighten. But, on the brighter side, nonfarm personal income is predicted to increase by about 5 percent each year through 2001.
As reported in the November/December issue of Business in Nebraska, total nonfarm jobs are predicted to grow at a rate just under 2 percent in 2000, and slow to 1.6 percent in 2001.
"In addition to restraining job growth, tight labor markets will exert upward pressure on wages," said John Austin, research associate in the University of Nebraska-Lincoln Bureau of Business Research and a member of the Nebraska Business Forecast Council. "Moderate job growth, combined with increasing wage rates, will yield moderately rapid growth in wages and salaries," prompting the nonfarm personal income growth rates of 5.1 percent in 2000 and 4.9 percent in 2001.
Labor supply restrictions are expected to keep employers from filling all available jobs, according to the report, with the pool of working-age Nebraskans expected to grow at about 1 percent per year over the forecast period, or at about half the rate of the growth in jobs. Manufacturing growth is expected to be slow, with the forecast council citing restructuring in agricultural equipment manufacturing and meat processing. Construction activity continues at high levels, as does trucking firm expansion and service employment.
Farm income predictions pointed to a return to profitability in livestock operations, prompting "cautious optimism" for the livestock industry through 2001 and the continued uncertainty and reliance on government payments for grain farmers. The predictors looked for Nebraska's net farm income to remain near $2 billion in 1999, 2000 and 2001, compared with the annual average of $2.2 billion from 1990 to 1998.
The forecast council also predicted that net taxable retail sales growth would be highest in 1999, and then decrease in 2000 and 2001, with growth rates of 5.1 and 4.9 percent respectively. Austin predicted that the slowing growth rate pattern will partially relate to a cyclical easing in the growth rate of motor vehicle sales.
Participants in this session of the Nebraska Business Forecast Council
were Tom Doering and Al Wenstrand, Nebraska Department of Economic
Development; Ernie Goss, Creighton University; Bruce Johnson, UNL
agricultural economist; Don Macke, Nebraska Rural Development Commission;
Donis Petersan, Nebraska Public Power District; Franz Schwarz, Nebraska
Department of Revenue; Bryan Skalberg, Nebraska Department of Labor;
Keith Turner, emeritus professor of economics, University of Nebraska at
Omaha; and Austin, Lisa Darlington and Charles Lamphear of the Bureau of
Business Research.
Back to menu
For questions regarding these releases, contact:
tsimons@unlinfo.unl.ed
u
(402) 472-8514, Fax: (402) 472-7825