Rural Oklahoma and the National Recession Dave Shideler Larry D. Sanders Presented to the Stillwater League of Women Voters March 9, 2010 Oklahoma State University Agricultural Economics Rural Development

The “microwave” briefing on the economy… 1.Recession is technically over, but… 2.Inflation, deflation and unemployment fears… 3.Some cautious optimism, but it won’t be back to “normal” for a long time. 4.Oklahoma’s economy may get worse, but not as bad as the US 5.OK: Oil, Natural Gas, Ag key roles in improvement, especially for rural OK. 6.Watch for double-dip 23/9/2010

So, the economy’s in the tank. What’s the solution? Output = Consumption + Investment + Govt. spending + Net exports – Consumption is down, but… – Investment is down – Net exports down, but… – Government spending is propping up the economy 3 3/9/2010

US Economy is Rebounding? US Bureau of Economic Analysis, accessed March 2, 2010 at 2:20 pmhttp:// 3/9/20104

US Unemployment Rate Monthly, 1980: Jan /9/ % [OK: 6.8%, Dec ‘09]

Total compensation, US, 12-mo. change, all workers A cartoon about demand-side economics. From "'Right to Work' Laws--Low Wage Scheme," Economic Outlook, January 1955, CIO Education Department. 63/9/2010

LABOR STATISTICS 3/9/20107

State, Metro, and Nonmetro Unemployment Rates SOURCE: Bureau of Labor Statistics, April 2009; *February 2009 Data Considered Preliminary

County Unemployment Rates 3/9/20109 Source: Bureau of Labor Statistics, March 4,

Percent Change in Unemployment Since the Beginning of the Recession 3/9/ Source: Bureau of Labor Statistics, March 4,

Percent Change in Unemployment Rates, December 2008-December /9/201011

RETAIL SALES 3/9/201012

SOURCE: Oklahoma Tax Commission Percent Change in Retail Sales, December 2007-February /9/201013

SOURCE: Oklahoma Tax Commission Percent Change in Retail Sales, February 2009-February /9/201014

Bank Card Delinquency Rate, September /9/ Delinquency rates are defined as the percentage of bank card accounts that are 60 or more days behind in payments; national delinquency rate was 1.8%. SOURCE: Federal Reserve Bank of New York, accessed January 8, 2010 at 4:30 pm

Bank Card Delinquency Rate of Change, September 2008 – September 2009 Rate of change in delinquency rates is defined as the percentage change in the percent of total bank card accounts that are 60 or more days behind in payments between September 2008 and September 2009; national delinquency rate dropped by 0.1%. SOURCE: Federal Reserve Bank of New York, accessed 1/8/10 at 4:30 pm 3/9/201016

Mortgage Delinquency Rate of Change, September September 2009 Rate of change in delinquency rates is defined as the percentage change in the percent of total mortgages that are 90 or more days behind in payments between September 2008 and September 2009; national delinquency rate of change was 2.1%. SOURCE: Federal Reserve Bank of New York, accessed 1/08/10 at 2:00 pm 3/9/201017

MINING & AGRICULTURE 3/9/201018

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Agriculture & the Macroeconomy 1.Nominal interest rates & loanable funds matter: Commercial ag is capital-intensive 2.Value of the $: agriculture is trade-dependent 3.Nonfarm employment: most farm family income comes from off-farm 4.Macroeconomic uncertainty: increased need for effective risk management tools in agriculture 5.Macroeconomic policy impact on Federal budget: much of primary crop agriculture relies on federal support 3/9/201021

OK STATE BUDGET & OUTLOOK 3/9/201022

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Source: Oklahoma Policy Institute 3/9/201025

State Agency Budgets ‘10 – ‘12 Most agencies are being cut 7.5% this year. Rainy Day Fund and ARRA funds will be used to keep the cuts from being deeper. An additional 12%, across of board reduction, will likely be needed to stay within available funds for FY ’11 (even using RDF and ARRA). In FY ‘12, the $774 million in RDF and ARRA used in FY ‘11 are not available. Source: Oklahoma Policy Institute 3/9/201026

Economic Meltdown Fallout: Where are we headed? US economy is vulnerable to the following forces in : – Deflationary trend: Falling wages, retail prices & spending, leading to both lower local government tax revenue and fewer employment opportunities – Potential inflation – Persistent unemployment – Increase in oil prices 273/9/2010

So, where’s the aspirin??? For unemployment, retirement accounts, and general economic stagnation, it may be years before we see much recovery Couple that with the likelihood of a “double- dip” economic cycle in the next 1-3 years 283/9/2010

Questions? Dave Shideler (405) /9/201029