Premium ContentMouse over Home then click on Premium Content for information.December holiday retail spending shot up — way up — as 2011 wound to a close, but growth of the Omaha-Council Bluffs metropolitan area's overall economy slowed from the previous month.
The result came as a surprise to the trio of University of Nebraska at Omaha economists who developed the Omaha Economic Index, an Omaha-specific measure of the area's economic activity. But the UNO economists said they remain optimistic that this month's statistical decrease is a blip in the city's economic rebound, not a sign of sustained, long-term derailment.
Even though consumers spent heaps of money at area retailers during the holiday season, the number of new residential and commercial building permits issued slowed dramatically, leaving the index with an eroded score of 0.74 from a revised November index of 0.85, which was originally reported as 0.98.
Any score above zero shows the economy is growing. The metro index has been in growth territory since February 2011.
Adjustments to the prior month are made depending on month-to-month changes in data reported by area government agencies.
"I had not anticipated a drop in December given the relatively active holiday buying season," said Christopher Decker, professor of economics in UNO's College of Business Administration and a member of the Nebraska Economic Forecast Council. "That said, the lower index value relative to November is not appreciably significant and the fact that the index is still positive continues to offer evidence of a growing metropolitan economy."
Decker, Kenneth Kriz and Mark Wohar developed the index to provide a previously unavailable monthly snapshot of the metro area's economy.
The index, which is based on five factors, saw two categories — taxable sales and nonfarm employment — improve, and three categories — residential and commercial building permits and industrial energy usage — recede in December.
The most surprising result among the individual factors was building permits. Both commercial and residential permits declined in December even though the month was unusually warm. But compared with previous years, Decker said, the permit numbers were not out of line. He described November's strong results as "unsustainable."
Decker said the construction industry will struggle to build momentum "over the next few months of 2012."
"Residential and commercial construction are sectors that have been struggling to grow, and they also tend to be relatively volatile," he said. "It is quite possible that we could see some moderate improvement in the permitting data through 2012."
Sustained growth in retail sales and job growth suggest the index drop is not signaling a negative trend, Decker said.
Retail sales were by far December's bright spot, the economists said. For the month, seasonally adjusted taxable sales were $853 million, the second-highest amount recorded by the Omaha Economic Index, which dates to 1999. Since July 2011, taxable sales have climbed steadily.
"The retail sales figures over the last few months are definitely good news for the metro economy, and I do think it bodes well for consumer confidence going forward," Decker said.
But there are even more encouraging long-term signs.
"I'm more excited about the jobs data," Decker said. "Omaha has been very robust in job creation since 2010, and continued good news on the job front is not only good for the economy but also will greatly bolster consumer sentiment."
According to seasonally adjusted employment figures, nonfarm employment in December was at the same point it was in February 2009, when the labor market was descending into the depths of the recession.
In November 2008, before the Omaha metro area started to shed jobs during the recession, there were about 474,000 nonfarm jobs. In December, there were 465,000.
Those numbers, coupled with the positive retail figures, bode well for Omaha's economy, Decker said.
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