Oklahoma State Senate

September 1998

• 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;

1,400 fires have burned 41,000 acres in central and southern Oklahoma, for a financial loss into the billions of dollars.

 1998 Economic Development Report Card:
Highlights

The Corporation For Economic Development is a nonprofit organization pursuing economic vitality and opportunity through competitiveness. CFED publishes annual development report cards for each state. Grades are based on 56 economic and social measures divided into four major categories: Economic Performance, Business Vitality, Development Capacity, and Tax & Fiscal System. The above chart presents highlights from Oklahoma's 1998 report card.

Since 1994, Oklahoma's grades for Economic Performance and Development Capacity have not been higher than D. In the same time, Oklahoma's Business Vitality grade has improved to a B, primarily resulting from the state's increasingly diverse economy, despite low income per worker from industries that are competing nationally and internationally.

The Oklahoma Legislature has already taken steps to address several problematic areas: highway infrastructure (1997 Session, HB 1629), job quality (1998 Session, SB 1289), and university research/technology resources (1998 Session, including SB 1405 and HB 2863).

Contact Senate Staff for additional details, definitions, or information.

Oklahoma Precipitation Statistics
April 1, 1998 through August 13, 1998
Climate Division	Total	Departure From Normal	Percent of Normal
Panhandle	10.31 in.	-0.68 in.	94%
North Central	13.08 in.	-0.66 in.	95%
Northeast	16.18 in.	-1.31 in.	92%
West Central	7.85 in.	-5.28 in.	60%
Central	10.24 in.	-5.57 in.	65%
East Central	12.11 in.	-6.01 in.	67%
Southwest	5.04 in.	-8.52 in.	37%
South Central	8.20 in.	-8.65 in.	49%
Southeast	11.06 in.	-9.27 in.	54%
Statewide	10.60 in.	-5.10 in.	68%