Oklahoma Economic Outlook for 2017 Positive But Not Strong
Tulsa and Oklahoma City are expected to be the state's engines in a slowly growing economy.
While the national rate is just over 1 percent, OSU economist Dan Rickman predicts 0.4 percent growth for Oklahoma. Rickman said Tulsa will reverse its recent negative rate and outpace the state, and Oklahoma City should lead the way with about 1 percent growth.
"What that implies is that, for the rest of the state, there's contraction. And, of course, a lot of this is occurring in energy-producing parts of the state," Rickman said.
Rickman's worst case is a nearly 10 percent contraction in six counties where only traditional oil and gas drilling still takes place.
Despite slow economic growth, Rickman said Oklahoma shouldn't pursue aggressive income tax cuts like Kansas did.
Rickman used weighted data from three states to create a model more similar to Kansas than any one state. Since Kansas' tax cuts in 2011, its employment growth has significantly trailed his model's. Rickman said it's not an illusion Kansas' tax cuts have hurt it.
"Because what do you do when you cut taxes more? You cut spending. You cut education expenditures," Rickman said. "Those have immediate, final demand spending effects in the economy. Well, what about all these benefits from low taxes? Well, obviously, it's not doing very much if you're lagging in growth."
And Oklahoma state and local governments may suffer because companies are doing more with fewer employees. Brian Henderson with Cavanal Hill Investment Management said the stock market now values 1 million employee Walmart at just a third of what it does 200,000 employee Amazon.
"This trend has implications not only for the workforce, but also just from the — how the states, counties and federal government raise taxes," Henderson said. "You know, payroll taxes, income taxes, less people to pay taxes."
Henderson said in an economy that's 85 percent service-based, he doesn't know what the state's economic plan is, and state officials need to spell it out.
Henderson and Rickman presented their findings at an economic outlook conference hosted by OSU in Oklahoma City.