Chickasha Rotary Club March 8, Chad Wilkerson

Transcription

1 Chickasha Rotary Club March 8, 212 Chad Wilkerson Oklahoma City Branch Executive and Economist Federal Reserve Bank of Kansas City

2 The Fed and the U.S. Economic Outlook

3 Federal Reserve Districts and Office Locations

4 The Oklahoma City Branch of the Federal Reserve Bank of Kansas City Functions 35 staff Economic research and outreach for U.S. monetary policy purposes Examinations and inspections of Oklahoma financial institutions Economic and financial education outreach to teachers and citizens Community development outreach to low and moderate income areas 212 board of directors Jim Dunn (chair), Chairman, Mill Creek Lumber and Supply, Tulsa Linda Capps, Vice Chairman, Citizen Potawatomi Nation, Shawnee Pete Delaney, Chairman, CEO, & President, OGE Energy Corp., OKC Jacque Fiegel, Senior EVP and COO, Coppermark Bank, OKC Doug Tippens, President and CEO, Bank of Commerce, Yukon K. Vasudevan, Chairman, Service and Technology Corp., Bartlesville Rose Washington, Exec. Director, Tulsa Economic Development Corp.

5 At its meeting last week, the FOMC expected solid GDP growth in Percent change, year-over-year Real Gross Domestic Product Jan. FOMC Forecast Ranges in Yellow Long Term Source: U.S. Bureau of Economic Analysis, FOMC

6 But for unemployment to only come down slowly the next few years Percent Unemployment Rate Seasonally Adjusted Jan. FOMC Forecast Ranges in Yellow Long Term Source: U.S. Bureau of Labor Statistics, FOMC

7 And for inflation pressures to stabilize after rising with oil and food prices in 211 PCE Inflation Index Percent change, year-over-year Jan. FOMC Forecast Ranges in Yellow Long Term Source: U.S. Bureau of Economic Analysis, FOMC

8 For the first time, the FOMC also released forecasts for interest rates Federal Funds Rate Year-end target 14 Percent Jan. FOMC Forecast Ranges in Yellow Long Term (3) (3) (5) Note Number of participants who project the initial increase will occur in the specified year in parenthesis Source: U.S. Bureau of Economic Analysis, FOMC

9 The Oklahoma and Regional Economic Outlooks

10 There is considerable variation in economic strength across the nation Employment Growth, Year-over-Year (percent) December (.1) 1.9 Source: U.S. Bureau of Labor Statistics

11 The level of jobs in Oklahoma is nearly back to pre-recession levels, unlike the U.S. Level of Payroll Employment 12 Index: Jan-8= TX 1 98 OK Other 1th District States U.S Jan-8 Jan-9 Jan-1 Jan Source: U.S. Bureau of Labor Statistics

12 Growth in most Oklahoma sectors slowed in second half 211, except energy and health Oklahoma Employment Growth 7, Number of jobs 6, 5, Jan-11 to Jun-11 Jul-11 to Dec-11 4, 3, 2, 1, -1, -2, -3, Mfg Trade, Transp. & Utilities Energy Educ & Health Govt Const Finance Prof & Bus Svcs Leis & Hosp Source: Bureau of Labor Statistics

13 Early 212 data on regional and national factory activity show moderate growth Manufacturing Composite Activity Seasonally Adjusted 65 Index KC Fed Dallas Fed U.S. (ISM) Feb-7 Feb-8 Feb-9 Feb-1 Feb-11 Feb-12 Source: KC, Dallas FRB Manufacturing Surveys

14 Oklahoma s unemployment rate has risen, as workers resume searching for jobs Percent Unemployment Rate Seasonally Adjusted* Dec-1 Jun-11 Dec U.S. OK TX Rest of District States Source: U.S. Bureau of Labor Statistics * Estimated by FRBKC

15 Unemployment is quite low in much of western, central, and southern Oklahoma County Unemployment Rates December 211 Source: OK Employment Security Commission

16 Oklahoma wages are catching up to those in surrounding states and the nation as a whole $25 Average Hourly Wage Seasonally Adjusted $25 $24 $23 $22 $21 $2 $19 U.S. TX Other 1th District States OK $24 $23 $22 $21 $2 $19 $18 $18 $17 $17 $ $16 Source: U.S. Bureau of Labor Statistics

17 Oklahoma has seen net in-migration from other states since the 21 Census Net Domestic Migration April 1, 21 - July 1, 211 Net inflows greater than.2% Little change in net migration Net outflows greater than.2% Source: U.S. Census Bureau

18 And home prices have held up considerably better than in the nation as a whole Home Price Index Purchase-Only 11 Index: 27Q2= OK U.S. TX Other 1th District States Q4 23Q4 25Q4 27Q4 29Q4 211Q4 Source: FHFA

19 Consumer debt is also less burdensome than in the U.S., even moreso than a decade ago Average Debt Per Consumer $2, Dollars $2, U.S. $16, Total Consumer Debt (excl. first mortgage) OK $16, $12, $12, $8, U.S. $8, Revolving Debt $4, OK $4, $ $ Source: Federal Reserve Bank of New York Consumer Credit Panel/Equifax

20 Problem loans are still elevated in OK, but much less so than in banks nationally Noncurrent Loans as a Share of Total Loans Commercial Banks 6 Percent U.S OK 2 1 Q4 21 Q4 22 Q4 23 Q4 24 Q4 25 Q4 26 Q4 27 Q4 28 Q4 29 Q4 21 Q4 211 Source: FDIC

21 Purchasing managers in the region remain relatively optimistic about 212 growth Tenth District Manufacturing Expectations Six-Months Ahead, Seasonally Adjusted 5 Index Production Capital Spending Employment Feb-7 Feb-8 Feb-9 Feb-1 Feb-11 Feb-12 Source: KC, Dallas FRB Manufacturing Surveys

22 Oklahoma has much less trade exposure to Europe than the U.S. as a whole Exports to Europe as a Share of GDP 3. Percent TX U.S Other 1th District States OK Source: WiSERTrade, BEA

23 Oil and gas lease rates have continued to rise in Oklahoma and other energy states Oil and Gas Lease Rates Most common bonus 7 Dollars/acre 6 5 Jan/Feb 29 Sept/Oct 21 Jan/Feb OK CO NM WY PA TX ND -----Tenth District energy states Other key land drilling states--- Source: Lierle Public Relations

24 Natural gas drilling has fallen sharply in the state, but oil has so far replaced the dropoff Oklahoma Rig Count 25 Number of rigs 25 2 Oil Natural Gas Jun-7 Jan-8 Aug-8 Mar-9 Oct-9 May-1 Dec-1 Jul-11 Feb-12 Source: Baker Hughes

25 Conclusions The U.S. economy continues to grow moderately, amid limited inflation and continued risks from Europe Growth in Oklahoma has slowed a bit recently but conditions remain much better than in the nation as a whole

26 Questions? For more information about the Oklahoma economy, subscribe to the quarterly Oklahoma Economist at: