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August 1, 2022

Modest Improvement Forecasted for State Economy

Nebraska’s Leading Indicator Predicts Six-Month Slower Growth
August 1, 2022: Modest Improvement Forecasted for State Economy
After a modest improvement in June, the University of Nebraska–Lincoln’s leading economic indicator (LEI) predicted six-months of slower growth. Eric Thompson, director of the Bureau of Business Research and K.H. Nelson Professor of Economics, developed the LEI, based on six component – business expectations, building permits for single-family homes, airline passenger counts, initial claims for unemployment insurance, the value of the U.S. dollar and manufacturing hours worked.

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Nebraska’s leading economic indicator rose modestly in June, according to the most recent report from the University of Nebraska–Lincoln. Designed to predict economic activity six months into the future, the leading indicator expanded by 0.68%.

“The June increase followed a decline in the indicator during May, suggesting slow economic growth in Nebraska over the next six months,” said economist Eric Thompson, department chair, K.H. Nelson College Professor of Economics and director of Bureau of Business Research.

The six components of Nebraska’s Leading Economic Indicator include business expectations, building permits for single-family homes, airline passenger counts, initial claims for unemployment insurance, the value of the U.S. dollar and manufacturing hours worked.

The leading indicator improved for two primary reasons. First, there was an increase in manufacturing hours worked during June.

“Necessities such as food processing account for a large share of the Nebraska manufacturing industry, implying that demand will persist even as national economic growth slows,” said Thompson.

Second, Nebraska businesses remain confident about the future. Respondents to the June Survey of Nebraska Business reported plans to increase sales and employment over the next six months.

“The small businesses which respond to the Survey of Nebraska Business continue to see opportunities to expand, despite rising interest rates, supply chain issues, high energy prices and other challenges facing the Nebraska economy,” Thompson said.

The full report and a technical report describing the indicators are available at the Bureau of Business Research website, https://bbr.unl.edu.