Chad Wilkerson, vice president and Oklahoma City Branch Executive for the Federal Reserve Bank of Kansas City said, since March, COVID-19 and the collapse in oil prices have presented significant challenges for Oklahoma’s economy.
Wilkerson made the comment in a report on the economy published by the Kansas City office.
He also said employment in leisure and hospitality and most other industries fell sharply in April. Tax collections decreased, and unemployment continued to surge.
Rig counts dropped further in May, and energy prices remained low, Wilkerson said.
However, Oklahoma’s banking conditions were solid in the fourth quarter, and a strong national policy response should help during the storm.
COVID-19 CASES SPREAD RAPIDLY
Since March, cases of COVID-19 spread rapidly across the nation, and cases in Oklahoma also rose, although not as rapidly, Wilkerson said.
While confirmed cases across the country rose to 0.50% of the population from early March through May 27 as cases in Oklahoma rose to only 0.15% of the population, he said.
But the number of new cases across the US during the same timeframe have been on a general, but slow, decline after the initial spike as the number in Oklahoma moved unevenly sideways after the initial spike.
JOB GROWTH FALLS
Oklahoma’s job growth fell by 8.7% in April, with similar sharp drops in OKC and Tulsa, Wilkerson said.
Non-farm payroll employment growth retreated into negative territory by May 27, dropping to negative 13%.
Wilkerson added that, state and metro job losses were very step in April in the leisure and hospitality sector but less than across the US. Tulsa area leisure and hospitality job losses fell nearly 50% year over year, compared with more than 30% in Oklahoma City and for the state as a whole. US job losses in this area were something less than 30%.
Employment in mining, which includes oil and gas exploitation, also fell nearly 30% year over year in Oklahoma City, he said. The whole state lost about 25% from a year earlier.
It was interesting to note that federal government jobs grew slightly from year-earlier levels, as did jobs in transportation. Wilkerson said transportation jobs grew during the COVID-19 period, especially in the Oklahoma City area, as opposed to US transportation jobs, which fell nearly 10%.
And, as might be expected, April tax receipts fell considerably, compared with a year earlier, in part because the April 15 due date was delayed, he said. Tax receipts fell more than 30% across the state.
UNEMPLOYMENT JUMPS
Seasonally adjusted unemployment rates jumped to 13.7% the week of April 12-18, slightly less than the US rate of 14.7%, Wilkerson said. This also could contribute to lower tax revenues.
And right along with the higher unemployment rate was a jump in applications for unemployment insurance, although new claims have declined some since their peak earlier in April, he said. As of May 16, Oklahoma’s rate was down more than the US as a whole.
CATTLE, BEEF RECAP
Fed cattle trading was reported this week at $115 to $120 per cwt on a live basis, steady to down $2 from last week, and at $178 to $190 on a dressed basis, steady to up $3.
The USDA choice cutout Thursday was down $8.21 per cwt at $369.56, while select was off $6.11 at $344.09. The choice/select spread narrowed to $27.57 from $27.57 with 98 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday was $127.02 per cwt, up $0.91. This compares with Thursday’s Aug contract settlement of $135.50, up $1.47.