Oklahom.a Society of CP As March 28,2019

Transcription

1 Oklahom.a Society of CP As March,019 Megan Williams Associate Economist and Manager Oklahoma City Branch *1ne ntws expressed ht-rt~n arc those of the prt»cntt r only and do not nect-ssari!j rcfk'ct the \icws of the h'<krnl Rt-scrYc Bank of Kansas Cit\ or the Federal RcserYc System. Structure & Functions of the Federal Reserve The "Fed" consists of three main entities: Board of Governors: 7 members appointed by U.S. President Federal Reserve Banks: 1 total; semi-independent by design Federal Open Market Committee: 19 members; 1 voting Primary responsibility areas: Monetary policy Bank regulation Financial services

2 Federal Open Market Committee (FOMC) Board of Governors Reserve Bank Presidents Jerome H. Powell, Chairman Richard H. Clarida, Vice Chairman Randal K. Quarles, Vice Chairman of Supervision Lael Brainard Michelle W. Bowman Open t' Open John C. Williams, New York, Vice Chairman James Bullard, St. Louis Charles L. Evans, Chicago Esther L. George, Kansas City Eric Rosengren, Boston Patrick T. Harker, Philadelphia Robert S. Kaplan, Dallas Keel Kashkari, i\linneapolis Loretta J. Mester, Cleveland Thomas I. Barkin, Richmond Raphael W. Bostic, Atlanta Mary C. D aly, San Francisco *Permanent voters in bold; 019 rotating voters in red ; 00 rotating voters in blue The Oklahoma City Branch of the Federal Reserve Bank of Kansas City Functions and purposes - staff Research on U.S. and Oklahoma economies; energy sector and business survey focus Examinations of Oklahoma financial institutions (- banks, - 17 holding cos.) Community development programming, low and moderate income groups, workforce focus Economic education and public outreach programming 019 OKC Fed Branch Board of Directors Clint Abernathy (chair), Owner, Abernathy Farms, Inc., Altus Susan Chapman Plumb, Board Chair & CEO, Bank of Cherokee County, Tahlequah Walt Duncan, President, Duncan Oil Properties, Oklahoma City Tina Patel, Co-Owner & CFO, Promise Hotels, Tulsa Chris Turner, President & CFO, First State Bank, Oklahoma City Katrina Washington, Owner/ Broker, Stratos Realty, Oklahoma City Dana Weber, Vice-Chair & CEO, Webco Industries, Sand Sp.rings Oklahomans on the Kansas City Board of Directors Rose Washington (chair), Exec. Director, Tulsa Econ. D ev. Corp., Tulsa Doug Stussi, EVP & CFO, Love's Travel Stops & Country Stores, OKC

3 U.S. Economic Outlook and Monetary Policy U.S. GDP continued to grow strongly in Q, though somewhat slower than in mid-01 Contributions to Percent Change in Real GDP Percent change from the pre,,ious period, SAAR 1 ~----~--~--~ ~ ~ ~ - L ~ ~ - Total GOP Consumer Residential Business Exports lmports Government spending investment investment spending Source: U.S. Bureau of EconomiC Analysis

4 Monthly data on U.S. business activity show somewh at slower growth in January and February U.S. Payroll Employment and Business Indexes Change from previous month, thousands Index Payroll Employment Qeft a.xjs) ISM Manufacturing Index (right axis) ISM Non-Manufacturing Index (right axis) L,_.0 Feb-09 Feb- Feb-11 Feb-1 I'eb-13 Feb-1 Feb-1 Feb-1 Feb-17 Feb-1 Feb Sources: lnst1rute for Supply MaiUIIganent, Bureau of Labor Stt1SbCS FOMC: "Job gains have been solid... in recent m onths, and the unemployment rate has remained low." U.S. Unemployment Rate Seasonally Adjusted Percent ~ 1 Current (Feb. 019): 3.% Mar. FOMC Forecast Ranges in Yellow j Longer Run Sources: U.S. Bureau of Labor Sl:lilttSbCS, FOMC

5 "On a 1-month basis, overall inflation has declined, largely as a result of lower energy prices; inflation for items other than food and energy remains near /o." PCE Inflation Index Percent change, year-over-year, ~ Current Overall PCE (Dec. 01): 1. 7% Current Core PCE (Dec. 01): 1.9% 3 Mar. FOMC Forecast Ranges in Yellow 3 l Longer Run Sources: U.S. Bureau of Labor Stat1stics, FOMC "The [FOMC] will be patient as it determines what future adjustments to the... federal funds rate may be appropriate" 7 Federal Funds Rate Year-End Target Percent ~ ~ Current Target:.-.0% 7 3 Mar. FOMC Forecast Ranges in Yellow Longer Run Soun::es: U.S. Bureau of Labor StatL'lbCS, F0~1C

6 "The [FOMC] intends to slow the pace of the decline in reserves over coming quarters." Federal Reserve Balance Sheet $Trillion ~ Other L ~ Source: Feden.l Reser'\'e Board Oklahoma Economic Outlook

7 State job growth was led by metro job growth for most of 01, but the pace has slowed recently Nonfarm Payroll Employment Growth Percent change, year-over-year, Tulsa - -~ ~ Soun::es: U.S. Bureau o f Labor Statistics, NBER recession shading State and metro job gains have been led by mining (oil & gas), construction, and transportation Oklahoma Job Growth by Industry January 019 Percent 1 ~~~~~~~~ ~ u.s. 0K OKC Tulsa L ~ - Total Mining Constr. Transp. Leis. & Fed Mfg. Trade Fin. Edc. & State & Info. Hosp. Govt. Act. Health Local Govt Sources: U.S. Bureau of Labor Statistics/ Haver Anal)'tics

8 In agriculture, incomes continued to decline in 01, but farmland values edged down only slightly Oklahoma Farm Income and Farmland Values 00 -r- Diffusion Index Percent change,.::...;_; year-over-year : -, ~~r+~~~~~~-~r-~-~~-t~~~-+~-~ o Farm Income, left - Farmland Value, right Expectations Sources: FRBKC Ag Credtt Su rvey, USDA Unemployment has come down to exceptionally low levels in Oklahoma, especially in the large metros Percent Unemployment Rates Seasonally Adjusted - OK --- OKC --- Tulsa 0 +--~--~-~-~~-~-~--~-~--~-~ Sources: U.S. Bureau of Labor Stausncs, NBER recesston shadmg

9 In January, 7 of the 77 counties in Oklahoma had less than five percent unemployment Oklahoma County Unemployment Rates Seasonally Adjusted Unemployment Rate(%) D o-.0 % % %..1-.0% - >.1 % Source: U.S. Bureau o f Labo r Statistacs Regional factory growth remains strong despite tariffs, though slower than 01's record pace Index, 3mma Monthly Manufacturing Composite Indexes Seasonally Adjusted ~ , KCFed Sources: FRBKC 1\.-tanufacruring Sun:ey, Institute for Supply Management. N BER recession shadmg

10 Oil prices are down considerably since October, but bounced back recently to profitable levels Oil Profitability and Prices $/barrel 10 ~ ~ 1W WTI Futures KC Fed Energy Survey Profitable Price 0 ~----~----~------~----~----~------~ Sources: EI.A., FRBKC Energy Sun""e)', Yahoo Finance U.S. oil and gas production is at a record high, but with considerably fewer rigs and workers than in 01 U.S. O il & Gas Rig Count, Employment, and Production Index May-90= ~----~----~----~----~----~----~~--~ Rig Count - Employment - Production (BOE/day) Note: Employment 1S for AJCS 11,13111, and ProductlOn IS sho\\'n as a 3-month movmg average. Sources; Baker Hughes, U.S. Energy Info nnamn Admuustrauon/ Haver Ana1rocs

11 Recently, on net, more people have been leaving Oklahoma than moving into the state Oklahom a population changes by component, * M ap: Net Domestic Migration by County, ,000 r P-'-ers_ o:... "':. ; Pe-'- rce'-n-'- t c-'- han~g!:.: e'"-year '---o-'- ve--' r-y_:: ear-r 3 _ 0,000 0, ,000,000,000 - Net Domestic J'vligration, left -,000 - Net International Migration, left,000 - Natural lncrease, lcft , Population. right Net Miaration (Percent of pop. In 01) -> D o <.. Annual BEA population data used through 017, Census population data used for the most recent year. Sources: Bureau o f EconomK:: Analysis, Census Bureau/ Ha\'er Anal)'OCS, Population and Housing Unit Estimates - Census Bureau and author's cajculations More specifically, Oklahoma is losing prime-age workers (age -), and those with a bachelor's degree or more Oklahoma N et Domestic Migration by Age Oklahoma Net Domestic Migration by Education Level Persons 90,000 0,000 70,000 0,000 0,000 0,000 30,000 0,000, ,000-0, I_ - L Under to 3 3 to to to + Persons 90,000 0,000 70,000 0,000 0,000 0,000 30,000 0,000, ,000-0, L I - l-is Degree orsome College Bachelor's No HS Degree Equiv. Degree or Higher Sources: ACS t -rear sample Public Use Microdau- Census Bureau and author's calculations

12 Summary The U.S. economy continues to grow despite headwinds, and the Fed has been discussing interest rate and balance sheet plans. The Oklahoma economy also continues to grow, and unemployment is very low across most of the state. Agriculture remains sluggish and lower energy prices created some concern early in the year, but the O klahoma outlook for the rest of 019 appears moderately positive. Questions? RECEIVE REGULAR UPDATES ABOUT Oklahoma's economy For more analysis of t:h klahoma conomy, regional manufacturing conditions and regional energy conditions, sub ribe to receive alens fro m th KANSA CITY FED. Visit kanstlscityfed.orgfeafert to subscribe!