U.S. and Oklahoma Economic Update. Megan Williams Associate Economist and Manager, Oklahoma City Branch. The U.S. Economy and Monetary Policy

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1 U.S. and Oklahoma Economic Update Megan Williams Associate Economist and Manager, Oklahoma City Branch The U.S. Economy and Monetary Policy

2 GDP growth was relatively strong in the second half of Growth in Components of Real GDP Percent change from the previous period, SAAR Q Q Q Total GDP Consumer spending -7.9 Residential investment Business investment Exports Government spending Source: U.S. Bureau of Economic Analysis, Macroeconomic Advisors Monthly data show started out a bit slower, due in part to weather U.S. Private Payroll Employment and Business Indexes Change from previous month, thousands Index Private Employment (left axis) - ISM Manufacturing Index (right axis) ISM Non-Manufacturing Index (right axis) - Mar-9 Mar- Mar- Mar- Mar- Mar- Source: Institute for Supply Management, Bureau of Labor Statistics

3 GDP forecasts for - remain strong, as the economy recovers further Real Gross Domestic Product Percent change, year-over-year Mar. FOMC Forecast Ranges in Yellow - Long Term Source: U.S. Bureau of Economic Analysis, FOMC Unemployment continues to fall and could reach long-term levels by Unemployment Rate Seasonally Adjusted Percent Mar. FOMC Forecast Ranges in Yellow Long Term Sources: U.S. Bureau of Labor Statistics, FOMC

4 Inflation remains relatively low and is expected to stay subdued through PCE Inflation Index Percent change, year-over-year 7 7 Mar. FOMC Forecast Ranges in Yellow Long Term Sources: U.S. Bureau of Labor Statistics, FOMC Most FOMC participants project the first federal funds rate increase in Percent Federal Funds Rate Year-end target Long Term Mar. FOMC Forecast Ranges in Yellow () () () Note Number of participants who project the initial increase will occur in the specified year in parenthesis Sources: Federal Reserve Board, FOMC

5 The Fed s balance sheet is now set to grow slightly slower in than in Federal Reserve Balance Sheet $Trillions Assets Short term lending, targeted lending programs, and rescue operations Other MBS & agency debt Treasury securities Currency Reserves Other Liabilities Sources: Federal Reserve Board The Oklahoma Economy

6 OK employment is above pre-recession levels, with some differences across the state Level of Payroll Employment Through February Index: Jan-= OKC Metro Oklahoma U.S. Non-Metro OK Tulsa Metro Jan- Jan-9 Jan- Jan- Jan- Jan- Jan- Source: U.S. Bureau of Labor Statistics Since last year, federal jobs fell across the state, but some other sectors grew strongly Oklahoma Job Growth by Industry Feb- Percent change year-over-year OK OKC Tulsa Rest of OK Total Hospitality Constr. Trade & Transp. Finance Edc. & Health Energy State & Local Govt. Prof. & Bus. Services Mfg. Fed. Govt Source: Bureau of Labor Statistics

Unemployment rates remain low throughout most of the state Oklahoma County Unemployment Rates January Source: OK Employment Security Commission Rig counts have edged higher the last few

7 Unemployment rates remain low throughout most of the state Oklahoma County Unemployment Rates January Source: OK Employment Security Commission Rig counts have edged higher the last few months, driven by oil Oklahoma Active Drilling Rig Count Seasonally Adjusted Number of rigs Oil Natural Gas Mar-9 Sep-9 Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Source: Baker Hughes

And oil and gas production in the state has

Production Thousand barrels/day Bcf/month Oil

Source: EIA Drought conditions persist in

8 And oil and gas production in the state has continued to increase Oklahoma Oil and Gas Production Thousand barrels/day Bcf/month Oil (left) Natural gas (right) 9 Q Q 9 Q Q Q Q Source: EIA Drought conditions persist in much of western Oklahoma U.S. Drought Monitor, March U.S. Drought Monitor, March U.S. Drought Monitor, March U.S. Drought Monitor, March Source: USDA

9 Cattle inventory has dropped more in OK than elsewhere, but may have bottomed U.S. Cattle Inventory As-of January 7. Million Head Million Head Kansas (left scale) 9 Nebraska (left scale). Oklahoma (left scale) U.S. (right scale) Source: USDA Housing construction remained solid in despite slightly higher rates Single-Family Housing Permits Seasonally adjusted, Number of permits, -month moving avg.,,, U.S. (left axis) OK (right axis),,,,,,,, Feb- Feb- Feb- Feb-7 Feb- Feb-9 Feb- Feb- Feb- Feb- Feb- Source: U.S. Census Bureau

10 Home prices are now well above pre-bust levels, unlike the nation Index: 7Q= Home Price Index Purchase-Only Tulsa OKC U.S. OK Q Q 7Q 9Q Q Q Source: FHFA Banking conditions in the state remain better than in the nation Noncurrent Loans as a Share of Total Loans Commercial Banks Percent U.S. OK Q Q Q Q Q 7 Q Q 9 Q Q Q Q Source: FDIC

11 Summary U.S. economic growth has been solid with low inflation, and the outlook appears favorable for Oklahoma s economy also continues to grow, and conditions remain better than the nation Questions and Links For more information about the Oklahoma City Branch of the Federal Reserve Bank of Kansas City, visit our website at: For more information about the Oklahoma economy, subscribe to the quarterly Oklahoma Economist at:

The Federal Reserve, Monetary Policy, and Economic Indicators

The Federal Reserve, Monetary Policy, and Economic Indicators Megan Williams Associate Economist Federal Reserve Bank of Kansas City, Oklahoma City Branch The Creation of the Fed The first two national