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Regional Economy Starting to Shrink as COVID-19 Takes Hold

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A survey of manufacturers in Oklahoma and eight other states in the mid-America region now indicates a shrinking economy.

After three months of growth, the Mid-America Business Conditions Index dipped below growth neutral 50 on its 0–100 scale, falling from 52.8 to 46.7. Oklahoma slid from 51.5 to 45.7.

March’s index was at the lowest level since September 2016.

Creighton University economist Ernie Goss said all indications point to things getting worse as the coronavirus pandemic stretches on.

"Manufacturing’s holding up a bit better than other sectors. For example, retail — holding up better than retail, holding up better than tourism, hospitality, which is really being hit hard. So, I expect the numbers in manufacturing to get worse in the months and weeks ahead," Goss said.

Most supply managers surveyed said they’re encountering shipping problems and increased worker absences, and all nine states saw dramatic increases in first-time unemployment claims.

Goss said the decline is driven by the coronavirus pandemic, but other conditions are poised to make things worse in the coming months.

"Crude oil prices are down to a level that’s not supportive of the shale oil producers. We’re going to see more bankruptcies in the shale oil producers in North Dakota, Oklahoma — not good, of course," Goss said.

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