Is Oklahoma’s economy still growing?
With a slight uptick in unemployment and a growing drop in oil and gas employment in Oklahoma, a question is being asked—Is Oklahoma’s economy still growing?
The answer given by Chad Wilkerson, Vice President and Executive of the Oklahoma City branch of the Federal Reserve Bank is mixed. He spoke recently at an Oklahoma State Senate retreat held in Stillwater and indicated Oklahoma’s economy slowed in 2019, thanks largely to lower oil and gas prices.
He offered several other observations on how energy plays such a critical role in Oklahoma’s economy:
- The slower state job growth in 2019 has been driven
mainly by job losses in energy and related sectors
- Oklahoma’s main difference from the nation in terms of
industrial structure is its very sizable energy sector
- Oil and gas’s share of Oklahoma’s economy has
fluctuated over time, but is currently still very high
- Marginally profitable oil prices since spring, plus low
natural gas prices, have contributed to slower activity
- Firms have also been able to find considerably more oil
and gas with fewer rigs and workers than in the past
- Oklahoma’s percentage drop in rigs is easily the largest
among the top 8 oil- and gas-producing states
October 2019 Rig Count Change from a Year Ago
As Wilkerson explained to the state senators, the pace of Oklahoma job growth has slowed steadily in 2019 and is now up only slightly from a year ago. The weekly initial claims for unemployment insurance have also been running at nearly 2015-16 levels in 2019.
The impact of the low oil and gas prices worldwide has resulted in state sales tax receipts below year-ago levels. But Wilkerson said sales in the two large cities, Oklahoma City and Tulsa have picked up slightly.
He also observed that unemployment in Oklahoma is low because more people have been exiting the state than the number of those arriving in the state. Further, highly educated Oklahomans in most age groups are leaving the state and many are headed to Texas.
Wilkerson says one consequence is that educational attainment is growing less. He said the silver lining is that people keep coming to Oklahoma–just more have left.
The Fed official said a longer-term trend worth watching is Oklahoma’s switch in net domestic migration flows in recent years as more highly educated Oklahomans leave the state. But he also indicated some industries in Oklahoma have continued to thrive and many pay good wages.
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