State of the Economy: Economists see bright spots, but warn of more hard times ahead

Friday, November 20, 2015

By Sarah Terry-Cobo
The Journal Record

OKLAHOMA CITY – Low commodity prices have been a drag on Oklahoma’s economy, and the effect will likely get worse in the short term, according to three local economists. Yet Oklahoma City’s geography will aid growth in the medium term, said University of Central Oklahoma Business College Dean Mickey Hepner.

Oklahoma City could make a national mark in the next decade by embracing robotic technology and solar power, said Vivek Wadhwa, Duke University research director for the Pratt School of Engineering’s Center for Entrepreneurship and Research Commercialization. Wadhwa addressed more than 800 people Thursday at the Greater Oklahoma City Chamber’s annual State of the Economy event at the National Cowboy and Western Heritage Museum.

Oklahoma City University economics professor Russell Evans said the next six to nine months don’t bode well for the Sooner State, because the economy is tied to oil and commodity prices that are expected to remain low for the foreseeable future. However, the capital city’s growth in general behaves more like a north Texas city, with companies attracted to the interstate transportation corridor, he said.

Hepner said the chamber facilitates new job creation unlike any other in the region. That will benefit the city’s medium-term growth, he said.

But Oklahoma’s tax policies have a negative effect on long-term growth, Hepner said. The Legislature lowered personal income taxes three times in the last seven years, effectively removing $1 billion from the state’s coffers. Oklahoma government is facing an anticipated $1 billion shortfall for the next fiscal year, which begins July 1, he said.

University of Oklahoma Economics Associate Dean Robert Dauffenbach said the state must invest in education to increase the number of workers with bachelor’s degrees or higher. The state’s educated workforce is growing at about 2 percent, slower than the national average of about 3.5 percent, according to research he conducted that examined graduation rates between 2005 and 2014.

“These are trends we cannot ignore. We ignore this at our own peril,” Dauffenbach said.

Hepner agreed that Oklahomans must make hard choices to invest in a skilled workforce for the next generation.

Wadhwa said Oklahoma and the state’s capital city in particular have a bright future in the next decade. But the state must invest in technology.

Oklahoma City could become a so-called smart city, in which smartphone sensors can help reduce traffic congestion, improve energy efficiency and lower pollution. The city and businesses could do so by investing $25 million toward installing sensors around the city that would work with residents’ smartphones.

“I’m not talking about a gazillion dollars. Imagine the message you send to the rest of the world. You could put Oklahoma City on the map, and that is possible today,” Wadhaw said.

Oklahoma City could become a nationally known center for robotic manufacturing, which could help bring investments in that industry from China to the center of the U.S., he said.

However, residents must embrace the idea the oil and gas industry will become obsolete in the next generation, Wadhwa said.

Electricity from solar photovoltaic panels is becoming more affordable and demand for petroleum products is dropping. Each time solar panel installations double, the price for those panels and equipment drops by 20 percent, he said. The entire globe’s energy needs could be met with solar power within 14 years.

“What this means is that the oil industry is toast,” he said. “I hate to tell this to you.”

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