Tortoise beats hare: Omaha’s county, for one year, surges to fastest growing economy in US

By one measure, the fastest-growing economy among the nation’s largest counties isn’t in Texas, Florida or any of the other usual big dogs.

It’s Douglas County, Nebraska.

In 2022, as the nation emerged from a pandemic, Douglas County’s gross domestic product grew 9.2% – the most of any county with at least 500,000 residents, according to a recent report by the Bureau of Economic Analysis. The county, home of Omaha, had never previously placed in the top 50 since the agency began recording the metric in 2018. 

Omaha-Council Bluffs’ 6.3% gain in economic output ranked second nationally among major metro areas, trailing only Austin.

So how did Omaha, with its slow and steady population growth, keep pace with exploding metros in the South? 

The driving force: Omaha’s deep-rooted finance and insurance industry, which drastically outperformed the national sector in 2022. 

Quick thinking and hard work at the beginning of the COVID-19 pandemic paid dividends for financial institutions and their customers when the economy fully reopened, business leaders said.

This lofty ranking is probably short lived, experts say. The county’s nation-leading GDP growth is unlikely to continue when the BEA releases figures for 2023 and 2024, but economists are optimistic that the area’s output will continue to climb upward at a stable rate. 

And that growth matters because it creates high-paying jobs and signals an overall healthy local economy.

“The higher you rise, the harder the fall is, so if we’re ‘steady as she goes’ with the economy, that’s pretty good,” said University of Nebraska at Omaha economics professor Chris Decker. 

A powerhouse industry

A glance at Omaha’s skyline will tell you that finance and insurance are big business in town. 

The city’s tallest skyscrapers belong to First National Bank and WoodmenLife. Mutual of Omaha’s new downtown home will rise above them once completed. 

From heavyweight Fortune 500 companies to small-time community banks, the industry employs about one in 12 workers in the metro – double the national rate, according to BEA statistics.

The finance and insurance industry accounts for a whopping 22% of Douglas County’s gross domestic product, triple the national level. 

The industry’s local origins date back to the mid-19th century when Omaha, a town that had sprouted along the Missouri River, established itself as a hub for both railway and river transportation.

As warehousing businesses flourished, a need arose to insure the valuable commodities they were storing, Decker said.

Banks and other financial companies emerged to hold and invest the money flowing through the burgeoning city.

The industry has since developed organically, giving Omaha a competitive advantage over other cities, Decker said.

The industry’s economic output grew by 28% in 2022, according to Decker’s analysis. Nationally, the insurance and finance sector narrowly contracted, making Omaha’s growth even more standout.

There’s no simple explanation for that growth, economists and business leaders say.

Jobs in the industry stayed relatively flat, but wages rose at double the national average, according to data compiled by the Greater Omaha Chamber. On paper, it appears that high worker productivity contributed to the high output, Decker said. 

The industry’s fast adaptation during the pandemic may have propelled the growth. 

In 2020, Nebraska banks emerged as early leaders in helping businesses access forgivable loans through the federal Paycheck Protection Program, said Lydell Woodbury, chairman of the Nebraska Bankers Association.

At Woodbury’s First Nebraska Bank in Valley, employees worked on businesses’ applications until 3 or 4 a.m., he recalls. 

When the applications got approved, the money allowed businesses to stay afloat and keep their workers employed, Woodbury said. Banks, in turn, had financially healthier clients that could repay loans and avoid foreclosures. 

State leaders opted for a quick reopening of the economy, and businesses were ready for it, Woodbury said.

“The reason we did better is because we stayed steady. We didn’t have a whole bunch of layoffs,” Woodbury said. “We didn’t have to start trying to ramp back up completely. We had a structure.”

It might sound corny, Woodbury said, but Nebraskans are resilient, and their comeback from the pandemic fueled the economic gains realized later on.

Some big-name financial and insurance companies have also seemingly contributed to the industry’s growth.

Fiserv, a Wisconsin-based financial technology firm that employs more than 5,000 people in the metro, increased its Omaha-area production in two core business functions by about 6% in 2022 without significantly boosting its workforce, said spokesman Chase Wallace. 

The Omaha boom of 2022 was many years in the making, said Greater Omaha Chamber President Heath Mello. 

Lawmakers and economic development officials have fostered an environment in Omaha where insurance and financial companies want to locate and boost their operations, he said.

“This is what happens when you are strategic in growing an industry,” Mello said. 

The 28% growth for finance and insurance is “impressive but likely not sustainable,” Decker said.

There are some clouds on the horizon. The state’s labor shortage will eventually stifle economic growth for the industry, said Nebraska Bankers Association President Richard Baier.

But Omaha’s economy is likely to keep seeing strong growth – around 3% – because of its diversity, business leaders and economists agree.

The city – with its two medical schools and several major hospitals – has become a hub for health care and scientific research, said Creighton University economics professor Ernie Goss.

An evolving concert scene and events like the College World Series have burnished Omaha’s reputation as a regional tourism destination, Goss said. Agriculture and food processing maintain a stable presence in the area’s economy, too, he added.

The broad base of Omaha’s economy makes it less prone to significant downturns and provides more stability for investors to trust, Decker said.

Local economic growth isn’t just good for businesses’ balance sheets, Mello said. It creates new good-paying, high-demand jobs, he said.

Having “the profile of growth” also makes Omaha an appealing place for newcomers seeking job opportunities and high quality of life, Goss said.

“2022 was a very good year for Omaha,” he said, “but I think with the profile of Omaha, the future could be just as bright.”