Economic Outlook:
National and State Conditions
Russell Evans
Executive Director
Steven C. Agee Economic Research and Policy Institute
Meinders School of Business
Oklahoma City University
U.S. Economic Overview
• Conditions continue to moderate…encouraging news at the
start of the year gives way to a disappointing spring
• Slowing labor market renews concerns of a stalling recovery
• Inflationary pressures remain at bay…but for how long?
• Global pressures mount as BRIC economies slowing and
Europe tries to balance austerity and growth
1959-01-01
EXCRESNS
M2SL
2010-09-01
2009-01-01
2007-05-01
2005-09-01
2004-01-01
2002-05-01
2000-09-01
1999-01-01
1997-05-01
1995-09-01
1994-01-01
1992-05-01
1990-09-01
1989-01-01
1987-05-01
1985-09-01
1984-01-01
1982-05-01
1980-09-01
1979-01-01
1977-05-01
1975-09-01
1974-01-01
1972-05-01
1970-09-01
1969-01-01
1967-05-01
1965-09-01
1964-01-01
1962-05-01
1960-09-01
M2 Money Supply, $ Billions
12000.0
10000.0
1600.000
1400.000
8000.0
1200.000
1000.000
6000.0
800.000
4000.0
600.000
2000.0
400.000
200.000
0.0
0.000
Excess Reserves of Depository Institutions, $ Billions
M2 Money Stock and Excess Reserves
1800.000
10 Year Constant Maturity
30 Year Conventional Mortgage
2011-04-01
2010-01-01
2008-10-01
2007-07-01
2006-04-01
2005-01-01
2003-10-01
2002-07-01
2001-04-01
2000-01-01
1998-10-01
1997-07-01
1996-04-01
1995-01-01
1993-10-01
1992-07-01
1991-04-01
1990-01-01
1988-10-01
1987-07-01
1986-04-01
1985-01-01
1983-10-01
1982-07-01
1981-04-01
1980-01-01
1978-10-01
1977-07-01
1976-04-01
1975-01-01
Percent Interest / Yield
Mortgage Rates and Treasury Yields
20.00
18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
U.S. Economic Outlook:
Risks and Commentary
• The Eurozone crisis and a Chinese slowdown
• Monetary policy, inflationary pressures, and the appetite for
risk
• Business and consumer uncertainty
OKC YOY % Change
TUL YOY % Change
AUS YOY % Change
OKC NF EMP
TUL NF EMP
Jan-12
Jun-11
Nov-10
Apr-10
Sep-09
Feb-09
Jul-08
Dec-07
May-07
Oct-06
Mar-06
Aug-05
Jan-05
Jun-04
Nov-03
Apr-03
Sep-02
Feb-02
Jul-01
Dec-00
May-00
Oct-99
Mar-99
Aug-98
Jan-98
Jun-97
Nov-96
Apr-96
Sep-95
Feb-95
Jul-94
Dec-93
May-93
Oct-92
Mar-92
Aug-91
Jan-91
NF Employment, Thousands
Non-Farm Employment: OKC, Tulsa, Austin
900
10.00%
800
8.00%
700
6.00%
600
4.00%
500
2.00%
400
0.00%
300
-2.00%
200
-4.00%
100
-6.00%
0
-8.00%
AUS NF EMP
The Central Question of Regional
Economic Development
What is the role of transaction costs in determining the location
of economic activity?
Restated: How flat is the world, really? (Friedman vs. Moretti)
How to Become an Economic Cluster of
Innovative Jobs:
Innovation is Organic, not Engineered!
Get Lucky
• Make your own luck by not losing tomorrow’s innovative
leader
Get Connected
• Physically and virtually connected within your region and
to adjoining regions
Get Proactive
• Build a bottom-up consensus on plans to develop and
retain educated workforce and foster creativity
Oklahoma Real Gross State Product
6.00%
160,000
5.00%
140,000
2.50%
3.00%
120,000
2.23%
100,000
2.00%
1.00%
80,000
0.00%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
60,000
-1.00%
40,000
-2.00%
20,000
-3.00%
-4.00%
0
Percent Change, OK RGSP
Percent Change, US RGDP
OK RGSP
$ Million Chained $
Percent Change, Annual Rate
4.00%
4.00%
1700
3.00%
1650
2.00%
1600
1.00%
1550
0.00%
1500
-1.00%
1450
-2.00%
1400
-3.00%
1350
-4.00%
1300
Percent Change
OK Non-Farm Employment
Employment, Thousands
Percent Change, Annual Average
Oklahoma Non-Farm Employment
20.00%
70
15.00%
60
10.00%
50
5.00%
40
0.00%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
30
-5.00%
20
-10.00%
-15.00%
10
-20.00%
0
Percent Change
OK Mining Employment
Mining Employment, Thousands NSA
Percent Change, Average Annual Employment
OK Mining Employment
OK Manufacturing Employment
10.00%
160
5.00%
120
100
0.00%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
80
-5.00%
60
40
-10.00%
20
-15.00%
0
Percent Change
OK Manufacturing Employment
Manufacturing Employment, Thousands NSA
Percent Change, Average Annual Employment
140
8.00%
78
6.00%
76
4.00%
74
2.00%
72
0.00%
70
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-2.00%
68
-4.00%
66
-6.00%
64
-8.00%
62
-10.00%
60
Percent Change
OK Construction Employment
Construction Employment, Thousands NSA
Percent Change, Average Annual Employment
OK Construction Employment
3.00%
300
2.00%
295
1.00%
290
0.00%
285
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-1.00%
280
-2.00%
275
-3.00%
270
-4.00%
265
Percent Change
OK Trade, Transport, and Utilities Employment
TTU Employment, Thousands NSA
Percent Change, Average Annual Employment
OK Trade, Transport, and Utilities Employment
OK Education and Health Employment
230
220
2.50%
210
2.00%
200
1.50%
190
1.00%
180
0.50%
170
0.00%
160
2005
2006
2007
2008
Percent Change
2009
2010
2011
2012
OK Education and Health Employment
2013
2014
Ed and Health Employment, Thousands NSA
Percent Change, Average Annual Employment
3.00%
OK Professional and Business ServicesEmployment
6.00%
190
185
2.00%
180
0.00%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
175
-2.00%
170
-4.00%
165
-6.00%
160
-8.00%
-10.00%
155
Percent Change
OK Professional and Business Services Employment
PBS Employment, Thousands NSA
Percent Change, Average Annual Employment
4.00%
3.00%
620
2.00%
600
1.00%
580
0.00%
560
-1.00%
540
-2.00%
520
-3.00%
500
-4.00%
480
Percent Change
OKC Non-Farm Employment
Employment, Thousands
Percent Change, Annual Average
Oklahoma City Non-Farm Employment
Concluding Thoughts
• U.S. conditions disappoint through the summer – cautiously
optimistic of a promising fall and 2013
• Oklahoma continues to perform well relative to the nation,
but well-supplied oil and natural gas markets likely cool
economic activity in 2012 and 2013
• Oklahoma City may be on cusp of becoming an innovation
center