Low farm prices and a tightening labor market will limit Nebraska's economic growth over the next three years, according to an economic forecast report released Friday.
The University of Nebraska-Lincoln's Bureau of Business Research said in the report that moderate economic growth is expected in Nebraska from 2017 through 2019. Employment is expected to rise by 1 to 1.1 percent a year — about 11,000 new jobs.
"A sharp drop in cattle prices and another decline in crop prices have driven farm incomes down further during 2016, and prices and farm incomes are expected to remain at low levels over the next three years," said Eric Thompson, an economist who serves as director of the Bureau of Business Research.
"Weakness in its largest sector will cap growth in the Nebraska economy, despite strong growth in other sectors such as construction and business services," he said.
Policies discussed by the incoming Trump administration could affect the growth, the report said. Tax reform and regulation reduction would foster growth, the report said, and plans to limit international trade and immigration would hinder economic expansion. The agriculture and manufacturing sectors' dependence on foreign trade make the state especially vulnerable to trade limitations, the report said.
In the nonagricultural sector, personal incomes are predicted to grow by more than 4 percent a year, thanks to expected worker shortages.
The construction industry remains the state's fastest growing, the report said. It is expected to add more than 5,000 jobs over the next three years, with annual increases of 3 percent to 3.5 percent.
The forecast is updated twice yearly and predicts economic growth three years into the future. It is developed in consultation with the Nebraska Business Forecast Council, a group of economists who work for the university, utilities and state government agencies.