MATT OLBERDING / Lincoln Journal Star | Posted: Friday, June 24, 2005 7:00 pm
In 2004, all 50 states' economies grew. Unfortunately, though, 49 of them grew faster than Nebraska's, according to statistics from the U.S. Bureau of Economic Analysis.
The bureau showed that Nebraska's gross state product a measure of the value of goods and services produced grew from a little less than $60.7 billion in 2003 to a little more than $61 billion in 2004, an increase of 0.9 percent. That was the lowest among all the states and well below the national average of 4.2 percent.
That paltry growth came despite record farm income in the state of nearly $4 billion in 2004.
Nebraska's neighbors fared much better, with growth rates ranging from 2.3 percent in Missouri to 8.1 percent in Iowa. Iowa's growth rate was tops in the nation, according to the bureau, an agency of the Department of Commerce.
Iowa also had record farm income in 2004, but according to a statement from the bureau, Iowa benefited from lower production expenses and was hurt less by drought than Nebraska.
In a statement relayed through his spokesman, Aaron Sanderford, Gov. Dave Heineman said that while he was disappointed that Nebraska was trailing other states in economic growth, "I have every confidence in the entrepreneurial spirit of Nebraskans."
Heineman went on to say that the numbers in the report fluctuate from year to year, and "a year of good weather could go a long way toward improving our standing, as could our economic development initiatives…"
Creighton University economist Ernie Goss said he was somewhat surprised by the numbers but also could cite several reasons for Nebraska's poor showing in 2004.
Beef industry restrictions caused by concerns about mad cow disease, both on exports to Japan and imports from Canada, had a big effect on the food processing industry in the state, Goss said.
"At least some of the less-than-stellar growth can be traced to the food processing industry," he said.
Goss said Friday's discovery of a second U.S. case of mad cow would continue to be a problem for the state's beef industry.
Another reason for Nebraska's sluggish economic performance, according to Goss, is the state's manufacturing industry is heavily concentrated on non-durable goods products like food, fuel and medicine as opposed to durable goods products such as hardware and machinery.
Goss said there has been more growth over the past couple of years in the manufacture of durable goods than in non-durable goods.
Those same factors may have something to do with why Iowa did so well in 2004, Goss said. Iowa has a much smaller beef industry than Nebraska, he said, and its manufacturing sector is much more dependent on durable goods. The bureau, too, noted the differences in the states' manufacturing sectors as a reason Iowa's growth was higher.
Goss, though, cautioned about putting too much stock in one year's economic performance. According to the report, Nebraska's growth was nearly 3 percent in 2002 and more than 5 percent in 2003. From 2000-2004, Goss said, the state ranked 32nd nationally in economic growth.
Eric Thompson, director of the Bureau of Business Research at the University of Nebraska-Lincoln College of Business Administration, agreed that one year is not a good measuring stick.
He pointed out that going back to 2000, Nebraska is about at the U.S. average for economic growth.
"I think this is just a little bit of the numbers will bounce around a bit year to year," he said.
Don Mihovk, vice president of public affairs for the Nebraska Chamber of Commerce, said the numbers weren't totally unexpected to him. But he said he does think things are headed up.
"I'll be real interested to see what it looks like the next time because I think we are on a better pace," he said.
Goss and Thompson both said they think 2005 numbers will be better. Thompson said he's "modestly optimistic" about this year, while Goss said he thinks the state will do "reasonably well."
But Goss also issued a note of caution about the state's economic prospects.
"Nebraska is just not growing like most economists, most politicians, most business people would like it to."
Reach Matt Olberding at 473-2647 or molberding@journalstar.com.
Economic growth rates
Here are the five fastest and five slowest growing states in 2004 based on gross state product, according to the U.S. Bureau of Economic Analysis:
1. Iowa 8.1 percent
2. Nevada 8.1 percent
3. Arizona 6.7 percent
4. North Dakota 5.9 percent
5. New Hampshire 5.8 percent
U.S. average 4.2 percent
46. Missouri 2.3 percent
47. Ohio 2.2 percent
48. Louisiana 2.0 percent
49. Michigan 1.5 percent
50. Nebraska 0.9 percent
For the full report, check out www.bea.gov.