Oklahoma’s Economy Ranked #15 | 2008 Great Recession

Oklahoma’s Economy Lost $2.1bn during the 2008 Great Recession

During the 2008 Great Recession in the US economy $634bn was wiped off Real Gross Domestic Product (Real GDP) between the economic peak in 2007 Q4 and the lowest point in 2009 Q2, a decline of 4.3%. In the same period Oklahoma’s economy fell by 1.4% as its Real GDP declined by $2.1bn to $143bn by the end of 2009 Q2, a performance that ranked 15^th when compared to other states.

The Real Gross Domestic Product data is collated by the Bureau of Economic Analysis (BEA). Real Gross Domestic Product (Real GDP) is the value of total economic output adjusted for price changes (i.e. either inflation or deflation). The BEA provides Real GDP data by industry sector and by state. The objective of this post is to reveal the impact of the Great Recession on the industry sectors that contribute to the entire state Real GDP.

The Great Recession Growth Index Table for 19 Private Sector Industries in Oklahoma’s Economy

The Great Recession commenced at the end of Q4 2007 and ended in Q2 2009. Using Real GDP in Q4 2007 as Index 100 the following table shows how the nineteen industries changed over this 6 quarter period.

Twelve states managed to increase their Real GDP during the Great Recession and therefore technically avoided one. Six out of twenty industry sectors increased their Real GDP during the recession also, but in Oklahoma’s economy 11 sectors increased their Real GDP.

The six sectors that increased their Real GDP nationally were:

• The mining sector increased by 18.7% in the US. Oklahoma’s mining sector was the third largest in Oklahoma’s economy at the start of the recession. By 2009 Q2 it had increased by 9.3% and $1.4bn to $16.8bn in a performance than ranked 19^th when compared to other states;
• The agriculture forestry fishing and hunting sector increased by 16.4% in the US. Agriculture commodity prices also rose sharply in 2008 resulting in bumper increases in Real GDP. This was Oklahoma’s best performing sector growth rate wise, as it increased by 10.4% and $131m to $1.4bn, a performance that ranked 29^th when compared to other states. Employee income did fall by 10.6% between 2007 and 2009;
• The finance and insurance sector increased by 9.5% in the US. The financial crisis in this sector was the catalyst for the Great Recession yet if avoided a recession itself thanks to a taxpayer bailout of a sector deemed “too big to fail”. Oklahoma’s finance and insurance sector was only the tenth largest in its economy at the start of the recession but did manage to grow by 2.6%, increasing Real GDP by $147m to 45.7bn, a performance than ranked 31^st when compared to other states;
• The educational services sector increased by 7.5% in the US, but Oklahoma’s educational services sector increased by 6.7% and $51m to $812m, in a performance ranked 27^th when compared to other states;
• The healthcare and social assistance sector grew by 6.1% in the US. In Oklahoma’s economy the sector grew by 6.5% and $628m to $10.3bn in a performance ranked 21^st when compared to other states;
• The government sector grew by 1.7% in the US during the Great Recession. Oklahoma’s government sector grew by 5.3% and $1.2bn to $25.7bn in a performance that ranked 6^th when compared to other states.

Oklahoma’s Private Sectors that increased Real Gross Domestic Product during the Great Recession

The five sectors that increased their Real GDP in Oklahoma but declined nationally were:

• The management of companies and enterprise sector increased by 7.1% in Oklahoma’s economy, adding $104m to Real GDP as it increased to $1.6bn. In the US the sector shrank by 9.1% so Oklahoma’s performance ranked 7^th when compared to other states;
• The accommodation and food services sector increased Real GDP by 6.5% and $279m to $4.6bn by 2009 Q2 in Oklahoma’s economy. This performance ranked #1 when compared to all states for a sector that fell by 10.6% nationally. Oklahoma was the only state where the accommodation and food services sector grew during the 2008 Great Recession;
• There may be a correlation between the accommodation sector and the arts, entertainment and recreation sector, which also grew in Oklahoma but declined nationally. The arts entertainment and recreation sector increased Real GDP by 5.2% in Oklahoma even though the sector fell by 4.1% in the US. The performance ranked 4^th when compared to other states (behind Ohio, District of Columbia and New York) as Real GDP increased by $36m to $726m;
• The construction sector was the hardest hit during the recession in the US as it shrank by 18.8%. But in Oklahoma the sector grew by 4% and $226m to $5.8bn, a performance that ranked 3^rd when compared to all other states, behind North Dakota and West Virginia;
• The retail trade sector was the sixth largest in Oklahoma’s economy in 2007 Q4, and it grew by $38m to $8.9bn during the Great Recession, equivalent to 0.4%. This performance ranked 3^rd when compared to other states, just behind North Dakota and Iowa. Alaska was the only other state to register an increase in this sector as it fell by 7.4% in the US in this period.

Oklahoma’s Private Sectors where Real Gross Domestic Product decreased during the Great Recession

Manufacturing was Oklahoma’s largest private sector prior to the recession but it shrank by 9.5% and lost $1.6bn in Real GDP to $15.4bn. By the end of the Great Recession the mining sector had overtaken it in terms of Real GDP. The performance nevertheless ranked 18^th when compared to other states as the sector declined by 12.9% nationally.

The wholesale trade, transportation and warehousing sectors fell faster in Oklahoma than in any other state during the 2008 Great Recession

The US wholesale trade sector was hit very badly during the recession and Oklahoma’s wholesale trade sector fell faster than in any other state. A 28.5% decline wiped $2.5bn off the value of Real Gross Domestic Product which dropped to $6.3bn in 2009 Q2. Nationally this sector fell by 16.5% losing $160bn in Real GDP in this period.

Oklahoma’s transportation and wholesale sector also fell faster than in any other state during this time. It fell 23.2% to $4bn, losing $1.2bn in Real GDP in this 18 month period. Nationally the sector fell by 11.3%.

The utilities sector also fell by 20.3% and $775m to $3bn, compared to a national average decline of 9.4%. Oklahoma is one of 4 states where this sector fared worst, the other three being New Mexico, Texas and Louisiana. The devastation brought on by Hurricane Gustav and Hurricane Ike in August and early September had a significant impact on this sector that only added to damage caused by the recession.

Employment market

Oklahoma’s potential labor force at the end of 2007 totaled 1,725,626 with 1,662,869 in work and 62,757 unemployed, equivalent to 3.6%. Unemployment increased to 116,878 in June 2009, equivalent to 6.6% but it continued to rise before peaking in February 2010 at 125,606 or 7.1%, an increase of 62,849 since December 2007.  By June 2009 Oklahoma’s labor force totaled 1,774,454 and 1,657,576 were in work.

By April 2017 the number unemployed fell to 78,312, equivalent to 4.3% of the workforce.