Oklahoma is not heavily dependent on manufacturing areas most effected by declining export demand:

leather and leather products (<1% of OK manufacturing), electronics and electric equipment (7% of OK manuf.), instruments (3% of OK manuf.) (see pie Chart);

While roughly 25% of Oklahoma exports are to Asian countries (including key industrial machinery exports), Asian exports account for less than 2% of Oklahoma's total manufacturing output; and

A smaller fraction of these exports are to countries experiencing severe crises (Indonesia, Korea, Malaysia, Philippines, and Thailand).

Changing exchange rates will lower the price of Asian imports, increasing competitive pressures in significant Oklahoma sectors such as automobile manufacturing (11% of OK man.). FRBK analysts predict only a modest impact on the Tenth District.

Agriculture news is more disturbing for farmers and ranchers, although Oklahoma as a whole is no more vulnerable. Agriculture accounts for less than 2% of Oklahoma's diversifying gross state product, compared with 17% for manufacturing. Two-thirds of Tenth District beef and pork exports, and one-third of wheat exports are shipped to Asian countries. Oklahoma wheat growers are already facing reduced wheat prices over the past year.

Despite the somewhat optimistic FRBKC report, Creighton University's Mid-American Business Conditions Index reached a two-year regional low, and a four-year Oklahoma low. CU analysts credit the combined effects of the strike, Asian crises, agriculture slowdown, and declining price of oil for the low indices (see Economic Indicators, pp. 5-8).

The Unfolding Drought Impact:

Record heat in combination with below normal precipitation in central and southern Oklahoma will likely have the greatest economic impact of the three events, much of it yet to come.

Between May and August, the state received 7.5 inches of rain, down 5 inches from normal (see table);

The Oklahoma Department of Agriculture (ODA) estimates losses due to the drought will exceed $2 Billion;