Oil is not main source of Q1 state GDP growth

Oklahoma’s real gross domestic product at the beginning of 2018 reflects broadbased economic growth.

After a big 3.3 percent real GDP increase mainly driven by oil in the fourth quarter of 2017, it increased a moderate 1.7 percent in the first quarter of 2018 from growth in a variety of sectors.

That put the state's growth rate at No. 22 in the nation, according to a report issued Tuesday by the Bureau of Economic Analysis.

“It’s good, solid growth. Not great, certainly not bad,” said Chad Wilkerson, economist and executive of the Oklahoma City Branch of the Federal Reserve Bank of Kansas City.

In recent years, the state’s economic rebound was primarily driven by strong growth in the mining sector, which includes the oil and gas industry, but that growth has come down to a more regular level.

“Even though the headline number maybe isn’t particularly strong, it’s solid and it’s broad-based growth across industries, so that’s usually a good sign for the economy,” Wilkerson said.

Robert Dauffenbach, director of the Center for Economic and Management Research at University of Oklahoma’s Price College of Business, said the energy sector continues to be a “growth impulse” for the state, but he noticed that oil was not particularly magnified in the first quarter.

“I believe we have a lot of gains in energy that are not accounted for in those firstquarter numbers that we’ll be seeing materialize in successive quarters,” Dauffenbach said.

Agriculture sector posts strong numbers

The agriculture sector had strong growth in the first

quarter after declining for the last three, but it tends to be volatile quarter-to quarter.

The outlook on agriculture has come down from the beginning of the year in part due to the drought in western Oklahoma, Wilkerson said.

“Agriculture was a big boost in the first quarter, but I don’t know if it will be in the middle of the year,” he said.

If the administration’s trade war continues to grow, this may have a negative effect on agriculture sector growth. But Wilkerson said the economy has been strong enough to absorb its effects so far.

Dauffenbach said the tariffs have led to lower agriculture prices.

“If we can get past the trade war talk, I believe that we’ll see gains in prices of wheat, corn and soybeans,” Dauffenbach

said.

Oklahoma’s growth was close to the national level, 1.8 percent, during the first quarter, which

is close to what most economists think of as the long-term potential rate of “trend” growth of the economy given population growth and productivity, Wilkerson said.

Real estate, rental and leasing in addition to information services were leading contributors to national growth.

Rising personal income in 2017 also played a role in Oklahoma's growth.