It’s far from a pretty picture when the Kansas City Federal Reserve Bank looks at the economic condition of Oklahoma.
In a snapshot of the state’s economy, the Oklahoma City Branch said the COVID-19 and the collapse in oil prices “presented significant challenges for the state economy, as tax collections decreased and unemployment surged.”
At the same time, the branch offered a glimpse of optimism, suggesting, “low initial unemployment, good banking conditions, and strong national policy response should help during the storm.”
It pointed out that nonfarm payroll employment growth in the state slowed steadily in 2019 and was only slightly negative in February and mid-March.
State energy job losses were steep by mid-March, and
employment across other sectors was mixed, added the branch report.
April tax receipts fell considerably compared with a year
ago, in part because the April 15 due date was delayed.
New state claims for unemployment insurance have
come down some, but remain historically high.
Most initial unemployment insurance claims in April
were filed by workers in the hospitality & food industry.
Regional factory activity in April fell to the lowest
reading in survey history (since 1994).
Many firms also reported employment changes in
response to coronavirus.
Around 20.2% of Oklahoma workers are employed in
sectors directly affected by COVID-19 shutdowns.
Oklahoma’s main difference from the nation in terms of
industrial structure is its very sizable energy sector.
In late March, regional energy firms expected drilling
activity to keep declining, with more job cuts.
Rig counts in Oklahoma and other energy states have
decreased dramatically as firms started well shut-ins.
Even with the planned OPEC+ supply cuts, energy
prices remain extremely problematic.
Energy firms expect solvency issues to grow
considerably if prices stay low very long.
Click here to view the Bank’s report.