Chad Wilkerson. Vice President, Economist, and Oklahoma City Branch Executive Federal Reserve Bank of Kansas City.

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1 Chad Wilkerson Vice President, Economist, and Oklahoma City Branch Executive Federal Reserve Bank of Kansas City

2 Recent Oklahoma Economic Trends Oklahoma s economy has grown strongly in 211, outpacing most parts of the country Job growth has been widespread within the state, across geography and industries Official unemployment rates in much of the state are down to full employment levels

3 There has been considerable variation in job growth across the nation the past year Employment Growth, Year-over-Year (percent) August 211 Source: U.S. Bureau of Labor Statistics

4 After a milder recession than the nation, Oklahoma job growth accelerated in 211 Payroll Employment Year-over-year percent change OK U.S Aug-6 Aug-7 Aug-8 Aug-9 Aug-1 Aug-11-6 Source: U.S. Bureau of Labor Statistics

5 Job growth has been strong across the state, especially in non-metro areas Employment Growth Year-over-year 6 Percent 5 Aug-1 Aug U.S. OKC Metro -1. Tulsa Metro -1.4 Lawton Metro -1. Non-metro OK Enid Micro* *Data for this area from LAUS rather than CES Source: U.S. Bureau of Labor Statistics

6 Most Oklahoma sectors have grown solidly in 211, led by energy and manufacturing Employment Growth August Percent change year-over-year U.S. OK -4 Total Energy Mfg Const Leis & Hosp Prof & Bus Svcs Finance Educ & Health State & Local Govt Trade, Transp. & Utilities Info Source: Bureau of Labor Statistics

7 The unemployment rate in Oklahoma, 5.6 percent, is among the lowest in the nation Unemployment Rate August 211 Source: U.S. Bureau of Labor Statistics

8 Indeed, most of the state is back to levels often considered to be full employment Unemployment Rate Seasonally Adjusted* 12 1 Percent Aug-1 Aug U.S. OK OKC Metro Tulsa Metro Lawton Metro Non-metro OK* Enid Micro* Source: U.S. Bureau of Labor Statistics * Estimated by FRBKC

9 Oklahoma Economic Trends in Longer-Term Perspective Recent strong growth has allowed the state to catch up a bit on some key indicators However, economic activity in the state as a whole remains below pre-recession levels Still, some areas and industries in the state appear to have fully recovered

10 Both incomes and wealth in the state are closer to national averages than 1 years ago 1 Percent Oklahoma Per Capita Income and Wealth as a Share of U.S Personal Income 85 Stock Market/Housing Wealth Source: BEA, FHFA, Census Bureau, LPS, MBA

11 Home prices in large metros now compare more favorably to the U.S. and region Median Home Prices in U.S. and Large Tenth District Cities 275 Dollars Denver U.S Kansas City Omaha Tulsa OKC :Q2 23:Q2 25:Q2 27:Q2 29:Q2 211:Q2 75 Source: NRA

12 Banks have also held up much better, but are not back to pre-recession conditions Problem Loans as a Share of All Loans Commercial Banks 6 Percent U.S OK Q2 21 Q2 22 Q2 23 Q2 24 Q2 25 Q2 26 Q2 27 Q2 28 Q2 29 Q2 21 Q2 211 Source: FDIC

13 Despite recent strong job growth, state employment is still lower than in early 28 Total Payroll Employment Since Beginning of U.S. Recession 12 Index: Jan-8= OK U.S Jan-8 May-8 Sep-8 Jan-9 May-9 Sep-9 Jan-1 May-1 Sep-1 Jan-11 May-11 Sep-11 Source: U.S. Bureau of Labor Statistics

14 Tulsa has recovered less than OKC and, especially, smaller cities and rural areas Change in Employment Since January 28 Seasonally Adjusted 3. Percent U.S. OK OKC Metro Tulsa Metro Lawton Metro Non-metro OK Enid Micro* *Data for this area from LAUS rather than CES Source: U.S. Bureau of Labor Statistics

15 Employment in most state industries is still lower than in 28, though better than U.S. Change in Employment Since January 28 1 Percent OK US Mfg. Nat. Resources Constr. Prof. & Bus. Services Fin. Activites Retail Leisure & Hosp. Govt. Edc. & Health Services Source: U.S. Bureau of Labor Statistics

16 State unemployment is not as low once labor force dropouts are considered Unemployment Rate by State Seasonally Adjusted 16 Percent Jun Jun-11 at 27 LFPR* US 1J MO CO NM KS WY OK NE *LFPR= Labor Force Participation Rate Source: Bureau of Labor Statistics

17 Indeed more of the drop in unemployment is from labor force declines than job growth Oklahoma Labor Force and Household Employment Labor Force Employment 155 Aug-98 Aug- Aug-2 Aug-4 Aug-6 Aug-8 Aug-1 Source: U.S. Bureau of Labor Statistics

18 Factors Affecting Oklahoma s Outlook International disruptions should generally affect Oklahoma less than other states Energy prices are always a risk relative to the nation, but oil remains highly profitable Agriculture has worsened recently, but manufacturers are cautiously optimistic

19 Oklahoma has much less trade exposure to Europe than does the U.S. as a whole Exports to Greece and Europe as a Share of GDP 2.1 Percent 1.963% Greece Total Europe %.3.8%.3% U.S. OK Source: WiSERTrade, BEA

20 Over the past few years, energy has been nearly as important as it was 3 years ago Mining Sector s Share of Oklahoma Activity 25 Percent Percent 25 2 GDP Personal Income Employment Source: BEA

21 As such, the outlook for energy prices remains vitally important to the state Energy Prices 15 $/MMBTU $ per Barrel Crude oil (right scale) Natural gas (left scale, per MMBTU) 3 Sep-6 Sep-7 Sep-8 Sep-9 Sep-1 Sep-11 Sep-12 Source: Bloomberg

22 Agricultural conditions have weakened, but remain better than in 29 Oklahoma Agricultural Conditions 15 Index Index Farm Income Q3 Expectations Capital Spending Source: KCFRB Ag Credit Survey

23 Manufacturing growth has slowed but is expected to rise slightly through 212 Manufacturing Composite Indexes 65 Index Index Six-Month Expectations 45 4 Oklahoma 4 Rest of Tenth District 35 ISM (U.S.) 35 3 Q3 26 Q3 27 Q3 28 Q3 29 Q3 21 Q Note Oklahoma and Tenth District calculated on an ISM basis; Above 5 indicates expansion Source: KCFRB Manufacturing Survey

24 Conclusions Oklahoma economic growth has greatly outpaced the nation in 211 While the state has made up ground relative to the nation, we have still not fully recovered from the recession Future risks seem less than in the nation, and contacts expect modest expansion