University of Nebraska-Lincoln economic report predicts recession in 2023
LINCOLN, Neb. (KOLN) -A new University of Nebraska-Lincoln economic forecast showed that the state could face hard times in 2023. The news has some business owners thinking ahead, hoping for the best.
Here in Nebraska, a recession would likely impact some sectors more than others. For small business owners like Michael Cubas, talks of a recession here in Nebraska could lead to some hard decisions.
“There’s no supplies,” Cubas said. “Demands will start going down, which I don’t blame the homeowners or any other people that don’t want to do remodels or build new homes because, of course, interest rates are sky-rocketing.”
Cubas, owner of Xtream General Contracting in Lincoln, does a little bit of everything: from landscaping to plowing to dry wall and concrete. His eight-person staff is like a family to him, and he doesn’t like to think about letting anyone go.
“It’s in the back of my mind, but I try not to focus to much on that. we go day by day,” Cubas said. “So far, we’re good. Our schedule list is pretty promising.”
UNL Economist Eric Thompson sees a recession becoming a reality but said this one won’t be like the previous two, which left millions struggling to put food on the table. He said it will be a smaller contraction, driven primarily by rising interest rates.
“Inflation is quite high,” Thompson said. “The federal reserve bank needs to raise interest rates as part of their efforts to reduce inflation, which is necessary to do.”
The shrinking economy will hit industries like construction, business services and retail the hardest. Others, such as healthcare, manufacturing and agriculture, will be the least affected.
Thompson expects unemployment to decline by 0.2% in 2023, but then he said it’ll rebound and grow by 0.6% in 2024 and 0.9% in 2025.
“The good news is I think when the economy works its way through the recession in 2024 and 2025, we can have broad-based growth across the economy,” Thompson said.
Thompson wanted to stress that though a recession is likely, it may only last a coupe of quarters. Despite the challenges, neither him nor Cubas expect anything like 2008.
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