Oklahoma's Economy Could Slow, Expert Says
The national economy is showing signs of slowing, and Oklahoma's economy could follow. Robert Dauffenbach, director of the Center for Economic and Management Research at the University of Oklahoma, says this is due in part to the state's reliance on oil and natural gas production. Journal Record editor Russell Ray discusses what Oklahomans should know about a possible economic downturn.
Drew Hutchinson: This is the Business Intelligence Report, a weekly conversation about business news in Oklahoma. I’m Drew Hutchinson. Joining me is Russell Ray, editor of The Journal Record. As Journal Record reporter Steve Metzer wrote in a recent article, the director of the Center for Economic and Management Research at the University of Oklahoma said last week that Oklahoma could be vulnerable to an economic slowdown, particularly because of the state’s economic reliance on oil and gas production.
Russell Ray: Well that's right. Robert Dauffenbach, the center’s director, said the state’s dependence on energy production could be a problem. Though oil prices currently are above $55 per barrel, natural gas prices are at historic lows. He said uncertainties created by the world’s response to fears of global warming and the rise of solar and wind power and electric vehicles have resulted in maltreatment of energy companies by Wall Street.
Hutchinson: A positive factor influencing Oklahoma’s economy is the recent investments made by Oklahoma City to improve its area. Dauffenbach suggested that this paid off in terms of creating jobs and raising income levels. But he said he’s worried about rural Oklahoma, which isn’t keeping up with the state’s cities.
Ray: Well Dauffenbach said it’s partly an educational issue. While many other states seem to be preparing more for an evolving economy driven by technology, Oklahoma isn't, especially in rural areas. Dauffenbach said he believes the state as a whole needs to commit itself to move investment in education, especially since the state is up almost $2 billion in tax receipts since 2017 and could possibly afford to put less in savings and more into action.
Hutchinson: Nationwide, unemployment is low -- it’s at 3.6 percent -- and important factors like consumer confidence and retail sales are up, thanks in part to online shopping. But there’s still evidence that the country’s economy is slowing down. Russell, what does Dauffenbach have to say about this?
Ray: Well, the low national unemployment rate is a sign of strength, but nationwide job growth has been slowing. Dauffenbach said the larger you are, the harder it is to grow. If growth in the national economy slows from a rate of around 3% to 2%, that would represent $400 billion in added value to a $21 trillion economy.
Hutchinson: Dauffenbach also said the federal government’s deficit spending is cause for concern, as well as the trade tensions between the U.S. and China. This has been a major factor in stock market performance, as investors try to make good financial decisions amid unpredictable circumstances.
Ray: Recent swings in the stock market are sometimes attributed to rising optimism followed by pessimism related to statements about trade and tariffs made by President Trump.
Hutchinson: Russell, all in all, how serious is Dauffenbach saying this nationwide trend is? Has he said Oklahomans should be worried about a recession?
Ray: He said it doesn’t seem likely that the state or nation will slip into recession any time soon. But there are clouds on the horizon and he says evidence of economic slowing is there.
Hutchinson: Russell, thank you for speaking with me today.
Ray: My pleasure, Drew. Thank you.
Hutchinson: Russell Ray is editor of The Journal Record. KGOU and The Journal Record collaborate each week on the Business Intelligence Report. You can follow us both on social media. We're on Facebook, Instagram and Twitter: @journalrecord and @KGOUnews. You'll find links to the stories we discussed during this episode at JournalRecord.com. And this conversation, along with previous episodes of the Business Intelligence Report, are available on our website, KGOU.org. While you're there, you can check out other features and podcasts produced by KGOU and our StateImpact reporting team. For KGOU and the Business Intelligence Report, I'm Drew Hutchinson.
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