Oklahoma

State

Senate

Quarterly
Monitor

Oklahoma Senate Staff

September 1998

1998 has been the year of external shocks to Oklahoma's otherwise strong economy:

• Southern drought;
  
• Asian economic crisis; and
  
• United Auto Workers' strike at a Michigan General Motors facility.

All three have had some economic impact on our state. Will these forces combine to ravage Oklahoma's economy? Evidence suggests that Oklahoma's economy will be spared the brunt of potential impact from the Asian crises and the GM shutdown. Current indicators show Oklahoma's economy still performing well.

• Oklahoma's unemployment rate has been below 5% since January 1995, and consistently below the national unemployment rate; and
  
  
• Oklahoma's gross state product has continued its decade-long increase.
  
  
• FY 1998 revenue collections came in at 104% of the estimate and 106% of FY 1997. (See page 3 for more details.)

Total losses due to the drought may not be fully realized until next year.

Impact of the General Motors Strike:

UAW strikes at two GM facilities in Michigan began early in June.

• Car production shut down at Oklahoma City's GM facility on June 18 due to a lack of components;
  
  
• Motor vehicle manufacturing now comprises 11% of Oklahoma's manufacturing base. (See pie chart)
  
  
• The shutdown idled over 3,000 Oklahoma employees and pushed Oklahoma's unemployment rate to 4% for the first time in 12 months;
  
  
• Car production did not resume until the strike ended six weeks later (August 3).
  
  
• The Oklahoma City shutdown resulted in $14.3 million actual loss of income, including a $10 million drop in disposable income (Oklahoma Department of Commerce);
  
  
• Unemployment insurance helped off-set roughly a quarter of the potential loss of income.

Workers directly affected by the strike lost income up to several thousand dollars. Many local businesses suffered from the drop in disposable income. However, steady performance in other areas will mitigate the effect on the city and state, overall.

The Asian Crisis: Near Miss?

The Asian crisis will impact two economic sectors relevant to Oklahoma (according to the Federal Reserve Bank of Kansas City): manufacturing and agriculture. The relatively good news for Oklahoma manufacturing is: