LINCOLN — Nebraska has weathered past recessions better than the rest of the country and might again, according to a leading state economist.
Eric Thompson, director of the Bureau of Business Research at the University of Nebraska-Lincoln, said Thursday that Nebraska’s high rates of workforce participation and education should help the state fend off the effects of high inflation and an economic downturn.
But Thompson offered a warning: “If the US gets into a significant recession, we’ll get pulled in, too.”
He spoke Thursday morning at the fall policy summit of the Open Sky Policy Institute, a Lincoln-based nonprofit that analyzes state fiscal policies.
Thompson answered questions around the topic, “Inflation and What it Means for Our State and its Economy.”
He said that the nation as a whole has benefitted from a long-running abundance of workers, but that trend is changing as baby boomers age out of the workforce and as legal immigration has declined.
The shortage of labor and supplies, combined with a rapid, post-COVID-19 increase in demand, have been the main drivers of inflation, which is at 8.1% in the Midwest, according to Thompson.
Nebraskans have “good resumes,” he said. The state has a higher participation rate in the workforce and higher percentages of college-educated people than the national average. That, Thompson said, could help blunt the impact of a national recession here.
“Those are the kinds of people who are more likely to hold onto their jobs during a downturn and find new jobs more quickly,” he said.
Some analysts have predicted that the US will have a “soft landing” from high inflation that won’t result in a recession that features widespread job layoffs.
But Thompson said it remains to be seen if the nation will fall into a recession or not, and whether there will be a soft or hard landing.
Attract more immigrants
Right now, he said that low-income and working-class Nebraskans are hurting the most because of inflation. It might present an opportunity for tax cuts that help those hurting the most or for systematic changes in the state tax system, Thompson said.
He added that the state might want to look toward attracting more legal immigrants to address its workforce shortage, which has left up to 52,000 jobs unfilled.
“Maybe we can be known as the state that’s most welcoming to immigrants,” Thompson said.