Dr. Mark Snead, an Oklahoma economist, had an almost completely positive message for Duncan leaders at the Duncan Area Economic Development Foundation’s Annual Appreciation Banquet.
Snead’s presentation focused on the effects of the recession, which began in 2008, the current conditions of the economy in Stephens County and what the future holds for the area.
“You got hit hard,” Snead said. “The cycle here was really deep. Part of that was because the goods-producing sector really took it on the chin. Construction was hit really hard. Government layoffs were much greater in Stephens County than the rest of the state. Manufacturing and energy contracted somewhat national like somewhat state like. The fifth difference is the rural regions of the state have been grossly underperforming compared to metro areas since the economy slowed in 2008.”
During the recession, the goods and government sectors took a major hit in Stephens County while the services sector did not respond to the recession negatively or positive.
“In essence, it is following a long-term, slow-growth cycle,” Snead said.
The goods sector, over the past year, has bounced back to what it was before the days of the recession. However, hiring in the government sectors in Stephens County continues to be affected.
Overall, the unemployment rate within the county continues to show a positive trend. While it did fluctuate at times within the recession, it is currently holding steady at four percent, which was the rate before the recession.
“What happened here that didn’t happen nationally was this rapid return in hiring, this fast bounce back,” Snead said.
Additionally, the participation rate in the job market in Stephens County is creeping up to 50 percent, a positive indicator for Duncan’s economy.
“Duncan, just 10 or 12 years ago, was among the lowest in a low-participation state,” Snead said. “In just the past decade, 10 or 12 years, you have gone from a low-participation rate in a low-participation state to among the highest in the state.” In fact there are just a few small counties with just a few 1,000 jobs ahead of you. You are more approaching what is traditionally considered a high participation rate. Fifty percent is that level where the higher participation rate tends to pay off with a higher standard of living.”
While the economic climate of Stephens County and Oklahoma remains positive, Snead said there are external risk factors that could pose problems to the area in the future.
“There is a clear slowing in the energy and maufacturing sectors,” Snead said. “There is no doubt about it. It is clearly slowing. It is a concern; it is an external force. There is nothing you can do about it.”
“Residential real estate remains a problem. It is not an Oklahoma problem; it is a national problem,” he said. “Europe may implode yet. They cannot quite figure out how to get along. A federal goverment impasse seems more and more likely.”
Snead said deleveraging could also serve to slow growth in the area and United States in the long run.
Despite what Snead called headwinds in the next few years, he does expect the country to come out of these troubles and grow at a small rate.
“After about two percent growth the past few years, we actually believe there is a strong possibility for 2.5 percent growth this year,” Snead said. “Enough of the impediments have been removed. It is literally impossible for the U.S. economy to grow at 3.5 or 4 percent.”
By the end of 2013, Snead said there is room for optimisim for a 3 percent growth rate.
It is basically a slightly slower version of this year, which was a very good year and was a slightly slower version of 2011, which was an outstanding year. In fact, in 2010-11 it was one of the fastest growing markets in the state.
Snead predicted that unemployment will continue to hover at about 4 percent with most jobs coming from the private sector while the governement sector will continue to experience hardships. He believes construction will experience modest job growth and there will be retail sales growth in the area.
If you think we cannot get through this, I would argue differently,” he said. “It is just a lot of big problems that have taken a lot of adjustment.”
Snead is the owner of Region Track, an Oklahoma City company that focuses on regional economic forecasting and analysis. Snead also worked at the Oklahoma State University Spears School of Business and the Federal Reserve in Denver.