During 2021 and early 2022, the Nebraska economy will continue to recoup the economic losses from the COVID-19 pandemic, according to the new three-year forecast from the University of Nebraska–Lincoln Bureau of Business Research and the Nebraska Business Forecast Council.
Employment levels will rise, ultimately returning to pre-pandemic levels by 2022, according to the forecast. Nebraska employment dropped by 3.7% in 2020 compared with 2019 and is expected to grow by 2.6% in 2021 and 1.5% in 2022. Employment growth should then “normalize” to a 0.9% rate in 2023, which is the average rate of job growth in the pre-pandemic period from 2010 to 2019.
Assuming that the spread of the novel coronavirus is brought under control, the forecast suggests employment growth will be strongest where losses were greatest, in the leisure and hospitality industry and in state and local government. Some job losses will be permanent, however, as the economy restructures. Retail trade employment, for example, is not expected to return to pre-pandemic levels.
“While many jobs will come back, the pandemic has accelerated long-term trends in the economy, such as shopping and working from home,” said Dr. Eric Thompson, K.H. Nelson College Professor, professor of economics and director of the Bureau of Business Research.
The outlook is also positive for Nebraska agriculture. Farm income is thought to have risen by 37% in 2020, according to the forecast, and much of that increase will be sustained in the next three years. Farm income will benefit from recent increases in crop commodity prices, as well as ongoing transfer payments. However, the contribution of transfer payments to farm income will fade in 2022 and 2023.
Nonfarm income growth will be solid in Nebraska, although impacted by stimulus checks, federal unemployment benefits and other transfer payments. Nonfarm personal income is expected to grow by 3.7% in 2021 but by just 0.6% in 2022 as stimulus ends. Nonfarm income growth is also expected to normalize in 2023, to 3.2%.
“Broad-based employment growth will be key for rising income in Nebraska, as it would create job opportunities for workers in most occupations,” Thompson said.
Among individual industries, service employment is expected to grow by 4.6% in Nebraska during 2021, including a rebound in employment in restaurants, hotels and other businesses within the leisure and hospitality sector. State and local government employment will change little in 2021 but is expected to bounce back in 2022, growing by 2.4%.
The retail trade industry is expected to add 1,000 jobs during 2021, far less than the 4,000 jobs lost in 2020. The manufacturing industry is expected to add 3,200 jobs during 2021, while the construction industry is expected to add 1,000 jobs. Construction was one of the few industries to add jobs in 2020.
Nebraska’s large and diversified financial services industry also is expected to add jobs. Employment should grow by 1.2%, or 900 jobs, in 2021.
The Nebraska Business Forecast Council is composed of Dr. Christopher Decker, Department of Economics at the University of Nebraska at Omaha; Dr. David Dearmont, Nebraska Department of Economic Development; Dr. Mitch Herian, Bureau of Business Research; Scott Hunzeker, Nebraska Department of Labor; Dr. Ken Lemke, Nebraska Public Power District; Scott Loseke, Nebraska Public Power District; Dr. Brad Lubben, Department of Agricultural Economics at Nebraska; Dr. Jim Schmidt, Department of Economics at Nebraska; Dr. Hoa Phu Tran, Nebraska Department of Revenue; Dr. Melissa Trueblood, Nebraska Public Power District; and Thompson.
Business in Nebraska Report: Nebraska Recovers from the Pandemic Economy, April 2021