Nebraska should be back to pre-pandemic levels of employment by early next year, with particularly booming times ahead for the construction, financial services and health care industries.
Those are some of the conclusions of a three-year economic forecast released this week by the University of Nebraska-Lincoln’s Bureau of Business Research.
The forecast projects that Nebraska’s pace of job recovery will top the nation as a whole, which is projected to return of pre-coronavirus levels of employment by late 2022 or early 2023.
“Nebraska’s recovery should be reasonably early in 2022,” said UNL economist Eric Thompson, the report’s chief author. “It won’t take all year.”
Assuming that the coronavirus is brought under control, the forecast suggests that employment growth will be strongest in industries in which job losses were greatest, particularly in leisure and hospitality and state and local government.
But some job losses will be permanent as the economy restructures because of fundamental changes left in the pandemic’s wake, such as the trend of more people shopping and working from home. Retail employment, for example, is not expected to return to pre-pandemic levels.
The report also noted that both personal income and farm income were strong in 2020 despite the pandemic, largely because of the unprecedented levels of federal assistance flowing into the state from Washington.
The Bureau of Business Research makes the forecast annually in conjunction with the Nebraska Business Forecast Council, a panel of public-sector economists.
Government restrictions and changes in public behavior intended to slow COVID-19 spread caused Nebraska to end 2020 with 3.7% fewer jobs than at the start. But the forecast calls for 2.6% job growth this year and 1.5% growth in 2022.
The report sees particularly strong prospects for the construction sector. While commercial construction will be limited given the new work-from-home trend, there should be strong markets for homebuilding and infrastructure such as roads.
The forecast anticipates that President Joe Biden and Congress will agree on some type of infrastructure spending package, but regardless, construction spending is expected to soar. The sector, which actually added more than 1,000 jobs during 2020, is expected to add more than 3,000 more by the end of 2023.
Financial services like banking and insurance also did well in 2020 because of the ability to work from home. The sector will continue to thrive in coming years, in part because of a strong housing market.
Health care suffered some job losses early in the pandemic, but rebounded quickly and is projected to see strong 3% growth during 2021.
Thompson noted that the growth in construction, financial services and health care bodes well for Omaha, as all are prominent sectors in the city.
Manufacturing was a mixed bag during the pandemic, with durable manufacturing seeing major disruptions while nondurables, including food processing, fared well.
While durables should regain just over half the lost jobs during 2021, the forecast calls for more job losses in 2022 and 2023, which would leave employment in the sector below 2019 levels.
But food processing should continue to add jobs in the future, Thompson said.
“Nebraska is just a very attractive location,” he said. “We just continue to grow.”
Farming was a bright spot in the pandemic, with 2020 farm income in Nebraska up an estimated 37% over the previous year.
Agriculture was at first boosted by federal payments, including the Paycheck Protection Program and assistance intended to offset losses during the trade war with China. But then, unexpectedly, grain prices rebounded strongly late in the year.
The good news is farm income levels are expected to largely be sustained over the next three years. While income may drop somewhat from 2020 as some of the subsidies go away, farm income should remain almost double the levels seen as recently as 2018, the forecast says.