A Tale of Two Cities' Job Growth for OKC, Tulsa

Thursday, August 07, 2008 9:55 AM

"Strong export growth remains the primary factor preventing a more serious downturn," he said.

The OSU report projected 1.6-percent real U.S. gross domestic product growth this year, but only 0.9 percent in 2009.

"The anemic GDP forecast suggests an extended period of weakness for the labor market," he said. "While still not a textbook recession at this point in the slowdown, the national economy has shed jobs for seven consecutive months with losses totaling nearly 500,000. At a minimum, this qualifies as a bona fide job recession."

Isolated cases of hiring weakness have broadened into slowdowns in wholesale trade, transportation, warehousing, retail and temporary employment, said Snead. Hiring remains strong in professional and business services, health care, government, and leisure and hospitality.

"We do not expect the weakness in the labor market to end quickly," he said. "Our forecast for the state assumes that national hiring will decline throughout the second half of this year and remain flat for all of 2009."

Oklahoma's 12-month job growth now runs at a 1.4-percent rate, Snead said. The state added some 22,500 jobs in the past year, ranking it among the top 10 states since the slowdown began. That reflects energy sector growth.

"No other sector of the state economy is responsible for more than a small fraction of the job and income gains relative to the nation," he said.

Snead characterized today's oil and gas activity as a "mini" oil boom, only resembling the glory days in terms of growing oil and gas severance tax revenue for the state.

"State production of oil and gas remains flat and drilling activity is at roughly one-fourth the level seen in the early 1980s," he said. "Employment gains in the sector are currently running at a rate of about 5,000-7,000 new workers per year, but remain modest in comparison to the 25,000 oil and gas workers added in 1981 alone."

Even so, with that underlying strength, Snead said it would take a "significant national recession" to end Oklahoma job growth.

"The only industry sectors in the state with expected job losses in 2008 are wholesale trade and real estate," said Snead. "The consumer-driven services sectors continue to add jobs and show no signs of overall state purchasing power succumbing to high energy prices."

Census estimates point to strong in-migration and population growth above the national level, he said, with 1.2-percent state population growth in 2006 and 1.1 percent in 2007, exceeding national marks. Snead expects the state estimates to be revised upward.

"The underlying strength of the state economy is confirmed by strong retail activity," he said. "Retail sales growth should reach 5.3 percent this year and slow only slightly to 4.1 percent in 2009. Nationally, retail sales are expected to increase only 4.1 percent this year and 2.7 percent in 2009."

The OSU report projected state income growth holding around 6.5 percent for 2008 and below 5 percent next year - both well above national forecasts.

"The state is on pace to reach 90 percent of U.S. per capita income this year, the state's best showing in the post-bust era," said Snead.

Originally published by Kirby Lee Davis.

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