Rob: From a nationwide mortgage meltdown to a job slow down in much
of the country, economic news has been less than stellar lately.
According to the labor department, U S employers added just 8,000 jobs in
December, the fewest in more than four years.
Meanwhile, the nation's unemployment rate rose to its highest level in more
than two years.
The report also renewed concerns that a slowdown in consumer spending
could lead to a recession in 2008.
Nevertheless, some sectors of the economy and some parts of the country did
better than others.
That's especially true in rural America according to a university study that
suggests, the Midwest may be doing better than either coast.
Rob: The Mid-America business conditions index is compiled by
Creighton University with information provided by business leaders from
across the Midwest, including Oklahoma.
Here in our state, economic conditions soared for the month of December.
A weak dollar, aided by strong farm income and an upturn associated with
energy production, lead that advance.
Our job loss rate did increase last year, but it is expected to stabilize
by the second quarter of this year.
Joining me now to talk more about the economic shape of our state, is
Mark Snead, the director of applied economic research at
Oklahoma State University.
Rob: Well Mark, not to be a Pollyanna here, but with all the bad news we're
hearing from a national level, is in some ways, is it overshadowing the good
news we have, maybe here in the mid part of the country?
Mark Snead: Well, it's clearly two situations; the U S economy is
slowing, the Oklahoma economy is slowing, but the bigger concern is at
the national level.
Rob: What is behind the strengths here in Oklahoma?
Snead: Well, there are two factors.
One is the energy sector; it is an unbelievable driver of the economy in
every area, the metropolitan areas and the rural areas.
It's a high wage sector.
It continues to provide stimulus to the economy, sort of regardless of
what's happening at the national level.
And, the second is the housing market.
Many areas of the nation, as you mentioned a moment ago, are experiencing
problems, and much of it is tied to the housing sector.
We simply aren't experiencing that here.
We have very stable housing price increases.
And if you look at some of the data, it even suggests that housing prices may
even actually be accelerating in Oklahoma.
Rob: Now, back on to the energy sector, real quickly.
Are we experiencing, what I think you described as, kind of a mini oil boom?
Snead: Yes; and that language is very specific.
It is a MINI oil boom.
If you try to compare this to the late 70s or 1980, 1981;
there really is no comparison.
That was a complete feeding frenzy.
It absolutely was the potential of the Oklahoma economy.
And this is a small fraction of that.
Nevertheless, it's very important, and it is
driving overall state growth.
Rob: So, if our strong energy sector may be insulating us from some
things that are going on at the national level, I'm assuming if the recession
goes on for a while nationally, it's got to
affect us here in the Midwest.
Snead: That's correct.
There's no way we will ignore it.
What we're wrestling with is, what are the conditions that would
allow us to continue to grow or outperform the
nation even while we're slowing?
And the conditions are, as we said, a stable housing market, the energy sector
is providing the extra stimulus we need, and we believe the state is
actually fairly well positioned to weather a national recession.
Not all states lose jobs in national recessions.
Usually half or fewer of the states lose jobs, and they tend to be highly
concentrated in a few states.
And it looks like this time it will probably be the coasts where the
housing market is particularly weak, and the Midwest will probably
ignore much of it to the degree possible.
Rob: If you had to pick some sectors, in 2008, that you think will be
strong, and maybe some that won't be as strong, what would they be?
Snead: Well, a couple of sectors that are very vulnerable, construction
and any financial services that might be related to housing.
Despite the fact that the housing and construction sectors continue to do
fairly well, they have weakened substantially.
And, that weakening will probably generate layoffs and weakness.
But what we're seeing, really the past three years, is a very broad
based expansion.
This has not been in selective industries or
in selective areas of the state.
Nearly every major industry sector is doing well.
And we believe most of them will continue to do so, except for these
housing related sectors of construction and financial services.