College of Business Administration
Steady Growth in an Uncertain World
Presented at
Retirement Planning Forum
Union Bank & Trust Retirement Plan Services
May 20, 2015
Eric Thompson
Director, Bureau of Business Research
College of Business Administration
University of Nebraska-Lincoln
ethompson2@unl.edu
www.bbr.unl.edu
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College of Business Administration
Outline
U.S. Economic Outlook
Nebraska Economic Outlook
The next 3 years
The next 6 months
The “Skills Gap”
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College of Business Administration
U.S. Economic Outlook
• Strengths
• Weaknesses
• The Bottom Line
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College of Business Administration
U.S. Economic Outlook – Strengths
• There is a self-sustaining recovery in the
U.S. economy, with improved
– Consumer spending
– Business Investments
– Housing Activity
• Oil prices have dropped sharply
• Interest rates will stay low – an “era” of low
interest rates
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College of Business Administration
U.S. Economic Outlook – Challenges
• The aging of the workforce
• Surprisingly weak growth in China
– The related issue of a rising U.S. dollar
• Uncertainty about the timing and pace of
Federal Reserve Bank interest rate increases
• Failure to address 3 critical reforms
– tax reform
– entitlement reform
– immigration reform
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College of Business Administration
U.S. Economics Outlook – Bottom Line
• Moderate growth
– The three reforms won’t be addressed
– Chinese growth will be a drag, especially in 2015
– But, the rapid rise in the dollar may be ending
• Growth has been weak in early 2015 but will
accelerate mid-year
• Growth in 2016 and 2017 stronger than in
2015
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College of Business Administration
Nebraska Economic Outlook
Next 3 Years
• Key Industries
• Forecast from the Nebraska Business
Forecast Council
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College of Business Administration
Key Industries
• Agricultural Industrial Complex
• Transportation
• Insurance
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College of Business Administration
Agricultural Production Cluster
Competitive Position of Nebraska
#1 in irrigated acres with nine million acres
#1 in commercial red meat production
#1 (tied with Texas) for cattle-on-feed numbers
#2 in corn-based ethanol production
#3 in corn for grain production
#4 in soybean production
#5 in all hay production
#6 in all hogs and pigs, and
#7 in hog slaughtering
Source: Nebraska Department of Agriculture
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College of Business Administration
The Other Source of Nebraska’s Advantage
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College of Business Administration
Transportation & Warehousing
•
•
•
•
•
Strong Agricultural Sector
Rail Industry Center
Interstate 80 Location
Skilled Workforce
Entrepreneurship
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College of Business Administration
Insurance Industry
• Historic Cluster
• Agglomeration – Abundant Industry Labor
• UNL Actuarial Science Programs
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College of Business Administration
Nebraska Employment Outlook (1000s)
Nebraska Business Forecast Council
Year
2007
2014
2015
2016
2017
Transportation &
Warehousing
56.2
52.2
52.7
53.5
54.6
Financial
Services
68.7
72.3
73.0
73.8
74.7
Sources: BLS and UNL Bureau of Business Research
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College of Business Administration
Other Sectors
Construction (2.5% - 3.0% per year)
55
50
45
40
35
30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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College of Business Administration
Other Sectors
Services (1.4% - 1.5% per year)
450
400
350
300
250
200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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College of Business Administration
Other Sectors
Manufacturing (0.4% - 0.6% per year)
120
115
110
105
100
95
90
85
80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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College of Business Administration
Non-Farm Employment Growth Outlook
2.0%
1.8%
1.8%
1.6%
1.6%
1.5%
1.4%
1.2%
1.1%
1.1%
1.1%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
2015
2016
United States
2017
Nebraska
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College of Business Administration
Other Growth Indicators
Measure
2015
Rate of Growth
2016
Non-Farm Personal Income
3.7%
4.0%
3.9%
Population
0.7%
0.6%
0.6%
2017
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College of Business Administration
Short-Run Nebraska Economic Outlook
Next 6 Months
• Survey of Nebraska Business
• Leading Economic Indicator – Nebraska
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College of Business Administration
Survey of Nebraska Business
• A survey of 500 businesses each month
• In most months, a 25% to 35% response rate
• A random selection of Nebraska businesses
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College of Business Administration
Survey of Nebraska Business (April 2015)
Outlook for Next Six Months
Increase
Stay the Same
Decrease
Change Over the Next Six Months
Sales
Employment
36%
24%
51%
73%
13%
4%
21
2%
0.00%
4%
3%
Other
1%
Minimum Wage
1%
Weather/Drought
1%
Access to or cost of capital
Competition/Improve
Business Practices
5.00%
4%
Poor Government Policy
9%
Government Regulation
10.00%
Health Care Costs/ACA
15.00%
Taxes
25.00%
Labor Availability and Quality
35.00%
Cost of Goods and Services
40.00%
Customer Demand
College of Business Administration
Survey of Nebraska Business (April 2015)
Top Business Concerns
34%
30.00%
21%
20.00%
12%
8%
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College of Business Administration
Survey of Nebraska Business
% Adding Jobs by Region (March/April 2015)
35%
29%
30%
25%
23%
22%
19%
20%
18%
15%
15%
10%
5%
0%
Statewide
Omaha MSA
Southeast
Central
Northeast
West
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College of Business Administration
Economic Outlook Next 6 Months
Leading Economic Indicator – Nebraska
Six components:
Business expectations
Value of U.S. dollar
Single-family home building permits
Airline passenger counts
Initial claims for unemployment insurance
Manufacturing hours
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College of Business Administration
Leading Economic Indicator – Nebraska (April)
Value Over Last Six Months
Figure 2: Change in LEI - N
Last 6 Months
2.44%
1.99%
1.29%
1.22%
0.66%
0.65%
0.00%
-0.02%
-1.22%
-1.33%
-2.44%
Nov 14
Dec 14
Jan 15
Feb 15
Mar 15
Apr 15
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College of Business Administration
Leading Economic Indicator – Nebraska (April)
Forecast For Next Six Months
Figure 7: 6-Month Forecast of
Coincident Economic Indicator - Nebraska
1.06%
1.25%
117.00
0.43%
0.56%
0.75%
116.00
0.60%
0.49%
0.10%
115.00
0.25%
114.00
-0.25%
113.00
112.00
-0.75%
111.00
-1.25%
110.00
Apr 15
May 15
Jun 15
Jul 15
Index Growth
Aug 15
Sep 15
Oct 15
Index Value
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College of Business Administration
Skills Gap in Nebraska
• Make It Work For Lincoln Survey
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College of Business Administration
Skills Gap
• A “skills gap” may be limiting growth in
Nebraska
• What is the nature of this skills gap?
• Example: Make It Work For Lincoln Survey
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College of Business Administration
Make It Work For Lincoln Survey
• Thank you to ATD - Lincoln Chapter, NDOL and
NEDED
• Designed to identify the hiring needs and challenges
faced by business as well as training activity
• Mailed to 1,300 Lincoln Metro Area businesses with 20
or more employees
• Responses received from 248 businesses
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College of Business Administration
Hiring Challenges
Is It Difficult to Find Workers?
70.0%
62.5%
60.0%
50.0%
37.5%
40.0%
30.0%
20.0%
10.0%
0.0%
Yes
No
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College of Business Administration
Hiring Challenges By Occupation
• Occupations Most Difficult to Hire
– Installation, Maintenance and Repair workers
– Personal Care and Service workers
– Production workers
• Occupations Least Difficult to Hire
– Office and Administrative Support workers
– Food Preparation and Serving workers
– Sales workers
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College of Business Administration
Hiring Challenges By Occupation
• Occupations where the primary difficulty is
a lack of occupation-specific skills
– Computer and Mathematical workers
– Installation, Maintenance and Repair workers
– Production workers
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College of Business Administration
Other Ways To Address the Skills Gap and Growth
Labor Supply
How do we encourage people to work more
and upgrade their skills?
Reduce tax burden on working class households
Address disincentives from the “Safety Net”
Provide more opportunities training and education
Address workers with “poor” work histories
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College of Business Administration
THANK YOU
Any Questions?
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