Reason for caution
The mixed bag of news coming out of the Nebraska Economic Forecasting Advisory Board recently is an indication of how one can choose to be positive, or negative, about what’s ahead for the state’s economy. Most of all, it probably shows how there are a lot of questions that only time will answer.
On the positive side, the advisory board improved its revenue estimate for this fiscal year, projecting the state will collect $69 million more in revenue than it identified in its February forecast.
On the flip side, the forecasters also predicted slower growth in state tax revenue over the next two years, leaving Nebraska with a projected $232 million budget shortfall in 2020-21.
The advisory board adjusted its 2018-19 prediction made in February for sales tax collections from $1.685 billion to $1.7 billion; individual income from $2.471 billion to $2.495 billion; and its corporate income tax from $308 million to $335 million.
While the state is experiencing low unemployment and high production in agriculture and other fields, forecasting board members said they sense Nebraska’s economy will contract in coming years.
“Sense” is the key word in the previous sentence. While the advisory board has plenty of statistics and figures to study, forecasting is not a precise science. There’s an element of, well, guessing that comes into play.
Tonn Ostergard, a member of the board, said he believes that while the state’s economy is “still strong,” Nebraska has passed its economic peak in the decade-long recovery since the 2008 recession.
Board member Richard McGinnis said even as the agricultural sector faces retaliatory tariffs from China and other countries, farmers are reporting “enormous” yields that may help most profit or break even this year.
Other board members said a lack of qualified workers has slowed production in some industries throughout the state, which combined with low unemployment has caused production to stagnate.
As the Legislature prepares to convene next year and as various governmental entities and agencies prepare budgets, there’s reason to be both optimistic and somewhat pessimistic about the future will bring. That, to us, is a reason to be cautious.