By Will McDermott
What the locals say
Oklahoma is shrugging off energy-induced recession.
Oklahoma is one of the largest natural gas producers in the nation and a major
supplier of crude oil as well. The state has more than a dozen of the country’s
largest natural gas fields and accounted for more than 7 percent of U.S. production in 2014. In addition, two of the 100 largest oil fields are in Oklahoma,
and the state ranked fifth in the nation in non-offshore oil production in 2013.
The state’s energy sector helped Oklahoma weather the years after the Great
Recession as an oil boom fueled economic expansion. The state’s quarterly
growth in gross domestic product (GDP) exceeded 5 percent nine times from
second-quarter 2011 through first-quarter 2015, with quarterly growth rising
above 10 percent three times during that period, according to data released
this past August by the Oklahoma Employment Security Commission (OESC).
Employment followed suit in those years, as state unemployment numbers
were routinely 1 to 3 percentage points lower than the national average, according to the U.S. Bureau of Labor Statistics.
Unfortunately, the growth spurt ended abruptly when the energy market
nosedived. Crude oil prices plummeted from a high of $105.79 per barrel
in June 2014 to a low of $30.32 per barrel in February 2016, according to a
June 2016 report from the Office of the State Treasurer of Oklahoma. The
resulting layoffs and rig closures had a huge impact on Oklahoma’s economy,
stripping as much as 2.5 percent from the state’s GDP in fourth-quarter 2015
alone, the report states. This began four straight quarters of economic contraction for the state.
The effects of this recession could be seen in employment and housing
numbers as well. The Oklahoma housing market stagnated throughout
2016, with closed sales and average prices falling slightly year over year after
posting four straight years of growth, according to data from the Oklahoma Association of Realtors. The state lost more than 16,000 nonfarm jobs
in 2016 — led by a loss of 10,400 jobs in the mining and logging sector —
resulting in a nearly 1 percent contraction in employment for the year,
according to the OESC report and a report from the Center for Applied
Economic Research at Oklahoma State University.
Oil and natural gas prices began to rise again in the second half of 2016, and
the subsequent increase in production lifted the state out of its recession.
Oklahoma’s GDP saw positive growth for the first time in a year in fourth-quarter 2016 and posted a second straight quarter of positive growth in
first-quarter 2017, according to a July 2017 report from the Office of the
Employment and housing numbers once again followed suit. The mining
sector added more than 6,000 jobs in the first eight months of 2017, and Oklahoma’s unemployment rate dropped from 5 percent in September 2016 to
4. 5 percent this past August. Average home-sale prices also are on the rise
again this year, and surpassed 2015 prices as of this past July. n
Home sales and prices
Closed sales and average sales prices on homes sold across Oklahoma
increased from 2012 through 2015 before leveling out and actually dipping
slightly in 2016, according to data from the Oklahoma Association of
Realtors. The annual average sales price increased from $156,687 in 2012
to $174,731 in 2015, an 11. 5 percent bump, while closed sales increased by
14. 9 percent over the same time period.
Both numbers dropped by less than a percentage point in 2016 while
the state was gripped by a four-quarter recession, but seem to be
rebounding in 2017. The year-to-date average sales price for homes in
Oklahoma as of this past July was $179,775, 4. 7 percent higher than the
$171,756 year-to-date average in July 2016 and 3.2 percent higher than
the $174,256 mark for the same period in 2015. Closed sales year to date
as of this past July also were up over comparable 2015 and 2016 levels.
Oklahoma Home Sales
Source: Oklahoma Association of Realtors
Closed sales Average sales price
*Y TD through July 2017
Senior mortgage originator,
Cornerstone Home Lending Inc.
“The group that is struggling the most is homebuilders who have
gone out and pushed their inventories up to service [the high-end] segment and are now sitting on those homes because there
are simply less buyers in that market. And [it’s] not just direct oil
and gas jobs, but also affiliated positions [such as] self-employed
guys that are running mud companies and trucking companies
[and] professions around the exploration and production of oil
and gas that are suffering.”