Oklahoma Economy Ends 2012 On Strong Footing

Friday, December 28th 2012, 8:51 pm
By: News On 6

Buoyed by a strong energy industry and gains in manufacturing, Oklahoma's economy closes out 2012 on better footing than many other states still recovering from the Great Recession and its aftermath, economists said this month.

The state added more than 36,000 jobs in 2012 and saw its unemployment rate tumble from 6.1 percent in January to 5.2 percent by November. That was good enough to best last month's national unemployment rate of 7.7 percent and earn Oklahoma a rank of the seventh lowest unemployment rate in the country, according to a report issued this month by the state's commerce department. Oklahoma also added more than 6,000 manufacturing jobs this year, according to the commerce report.

Gross revenue between December 2011 and November was about $11 billion -- $487 million more than collections from the previous 12 months. Sales tax collections last month were up nearly 9 percent from the year before, an indicator that consumer confidence was up.

"There's no reason to believe Oklahoma's economy is pulling back," Oklahoma Treasurer Ken Miller said this month.

The improving financial picture means Gov. Mary Fallin will have more money to work with as she crafts a budget for the upcoming fiscal year -- nearly $215 million more than last year, according to early revenue estimates. The extra money will also help to grow the balance of the state's Rainy Day Fund next year to an all-time high of more than $600 million, the governor's office said. The fund only had $2.03 in it when Fallin took office in 2011.

"The Oklahoma economy recorded another positive year in 2012, as the state again ranked among the top states in the nation for job creation," Fallin said in a statement to The Associated Press. "As the 2012 numbers show, our pro-growth, pro-business policies are working to build a more prosperous Oklahoma."

There were plenty of speed bumps in the way this year, such as the layoffs of hundreds of workers at a major American Airlines maintenance hub and Hostess Brands Inc. bakery -- both in Tulsa. A major drought that plagued the Midwest continued to take a toll on Oklahoma farmers, stunting this year's cotton crop.

Even with those setbacks, Oklahoma still ranked among the top 10 states for its overall growth rate, job gains and expansion of manufacturing jobs, according to the commerce department's estimates.

"Oklahoma has had a relatively robust year, economically," said Steven Agee, an economist and dean of the Meinders School of Business at Oklahoma City University. "We're like an island in a stormy, choppy sea right now. For Oklahoma ... unemployment is relatively low, there's good growth in job markets, the labor force participation is growing, manufacturing seems to be rebounding and of course, energy is holding in there."

Agee, a former oilman who once served on the board of directors for the Federal Reserve Bank of Kansas City, predicted more economic growth for Oklahoma in 2013 so long as federal lawmakers reach a deal with President Obama to stave off the financial hit many taxpayers would take if the country goes off the so-called "fiscal cliff" at the end of the year without an agreement on tax rates.

"If our rates go up, if there's no change, then most certainly, mathematically, the economy will slip into a recession," he said. "Demand will be down nationally, sales will be down nationally, discretionary income will be down nationally.

"It will eventually start to place a drag on Oklahoma's economy. That is a potential storm cloud on the horizon," he said.

University of Oklahoma research economist Robert Dauffenbach described how the state could be hit with a financial body blow if Congress and the president fail to reach a deal on the fiscal cliff before time runs out this year. The parties' inaction would trigger a series of automatic budget cuts -- known as sequestration -- that would chop spending by the Defense Department by hundreds of billions of dollars over the next decade.

"A big hurdle is sequestration because Oklahoma has proven itself over time to be a good value for the Defense Department," he said. "Sequestration would reduce defense spending and has a potentially damaging effect."

Oklahoma has five military installations, including Tinker Air Force Base in Oklahoma City, the state's largest-single site employer with more than 26,000 military and civilian workers.