Capitol Insider: OU Economist Hopeful About 2020
University of Oklahoma economist Dr. Robert Dauffenbach analyzes Oklahoma's economy and the national and state economic climate for 2020 with KGOU's Dick Pryor and eCapitol's Shawn Ashley.
Dick Pryor: This is Capitol Insider, your weekly look inside Oklahoma politics, policy and government. I'm Dick Pryor with eCapitol news director Sean Ashley. And our guest is Dr. Robert Dauffenbach, Senior Associate Dean for Economic Development and Impact at the University of Oklahoma Price College of Business. Bob, welcome.
Robert Dauffenbach: Great to be here.
Dick Pryor: Good to have you here.
Shawn Ashley: Dr. Dauffenbach, how would you characterize the Oklahoma economy right now heading into the holiday season?
Robert Dauffenbach: Well, for the Oklahoma City metro area, seven county area, I'm I feel very confident. We've had good improve employment growth in the area of good income growth. Overall, though, for retail sales, we're seeing a lot of disruption nationally. We're seeing increasing online sales and affecting brick and mortar type businesses. But overall, I'm fairly confident the consumer seems to be in the game very much nationally, and we think that will carry over to Christmas sales.
Dick Pryor: Dr. Dauffenbach, over this past year, what do you find encouraging and discouraging about Oklahoma's economy?
Robert Dauffenbach: Well, as I was saying, I'm most encouraged about the Oklahoma City metro area since the recession of 2008- 2009. We've grown employment by 75,000 in the seven-county region. That's a 12.8% growth in employment compared to 9.7% nationally, just to quote some numbers. Personal income in real terms, after adjusting for inflation, is up 130% since 1990. And Oklahoma City metro area’s share of state personal income has risen from a third to 38%. Now that's a gain of about five percentage points. And when you're talking about 1 percentage point representing 1.8 billion dollars, that's a considerable shift in the solidity of the Oklahoma City economic base for the Oklahoma economy.
Shawn Ashley: But the other side of that equation is that those dollars have moved out of some other areas of the state in to those seven county areas.
Robert Dauffenbach: Right. I keep a lot of statistics on what I call a balance of the state. Essentially, that's the state minus the Oklahoma City metro area, minus the Tulsa six-county metro area. So I call that the balance of the state and they've fallen from 40% to 32%. So that's an 8 percentage point drop, a huge drop. Tulsa metro area kind of stays in there fairly flat. When oil prices are high, they do better; not so high, they don't do quite as well. But, it's fairly stable. But that's an incredible decline in the balance of the state economy.
Dick Pryor: What does that pronounced shift toward the metro areas tell you about the health of the overall economy?
Robert Dauffenbach: Well, I think that structurally we're seeing a lot of change. This is an issue of where technology is going, what the educational content of jobs is and how that's changing. So, yes, I'm concerned about the Oklahoma economic base, too tied to oil, although we certainly like the good times and disparage the bad times, which we're kind of going through now, but generally pointing to a need to diversify the state's economy.
Dick Pryor: What are the prospects for the energy sector in the year ahead?
Robert Dauffenbach: Well, I don't know how they can get a whole lot worse. We've seen very depressed natural gas prices. We have very little of coverage in the S&P 500 of energy companies nationally. We're at a nadir that I find it difficult to imagine going much lower.
Shawn Ashley: What do you see in the year ahead?
Robert Dauffenbach: I see continued growth in the national economy. Certainly we're looking at some slowness, or more evidence of a downturn in manufacturing that may well be in sort of a little mini recession. We're still seeing, though, hope of real growth in the gross domestic product nationally of around 2%.
Dick Pryor: That's Dr. Robert Dauffenbach, Senior Associate Dean and Economic Development and Impact Director for the Center for Economic and Management Research at the University of Oklahoma Price College of Business. Thanks for joining us. And that's Capitol Insider. If you have questions, e-mail us at news@KGOU.ORG or contact us on Twitter @KGOUnews. You can also find us online at KGOU.ORG and ECAPITOL.NET. Until next time, with Shawn Ashley, I’m Dick Pryor.