Growth in Nebraska's economy is expected to slow to a crawl in the fall because of lower agricultural and industrial exports in response to the rapid increase in the value of the U.S. dollar.
That's according to a forecast of economic growth over the next six months. The Nebraska Leading Economic Indicator, released by the University of Nebraska-Lincoln College of Business Administration, also showed a 0.52 percent dip in May. It was the second time in the last three months that the measure has receded. In April, the indicator increased 0.71 percent.
When considering the mixed results of the March-through-May period, following a steady climb in December through February, it's likely that growth will slow dramatically after a summer spurt, said Eric Thompson, director of the university's Bureau of Business Research and associate professor of economics.
The latest three months “together are kind of a wash,” Thompson said, “so basically what that suggests is that the economy is going to grind to pretty slow growth in the fall.” The expected fall slowdown and tempered business expectations can all be tied back to the value of the dollar.
“The fast rise of the U.S. dollar “is bad news for exporters,” Thompson said. “Agriculture's been very strong for a number of years now, and it's still strong, but the news seems to be a little less good.”
The indicator is based on six factors — building permits, airline passengers, exchange rates, initial unemployment insurance claims, manufacturing hours and business expectations — and includes a monthly adjustment.
During May, exchange rates caused the biggest decline, followed by an increase in initial Nebraska unemployment insurance claims and lower business expectations. Business leaders responding to a survey said they expect a modest decline in sales and employment over the next six months.
There were, however, some signs of strength, Thompson said: Manufacturing hours continued to expand moderately during May, and building permits and airline passenger counts also climbed, reversing declines from the previous month.
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