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November 26, 2008

Banking on Duncan

Federal Reserve Bank luncheon reveals Oklahoma’s secret

John Walker

DUNCAN — An executive for the Oklahoma City Branch of the Federal Reserve Bank of Kansas City visited Duncan Tuesday afternoon to discuss the current state of the economy with local business and civic leaders.

While the basis of Chad Wilkerson’s presentation did not focus on the bailouts on the national level, he did touch on it during the question-and-answer period.

The question was posed about whether there would be inflation as a result of the bailouts.

Wilkerson said there could be, but that the bailouts were something that needed to be done now regardless of any inflation concerns.

“The real question is whether we will be able to take the money out once things settle down, as quickly as we put it in,” he said.

Tuesday’s luncheon event was sponsored by both the Federal Reserve Bank and Duncan Area Economic Development Foundation (DAEDF).

DAEDF President Lyle Roggow said that people are fortunate to live in Oklahoma.

“We’ve been frugal with our spending,” Roggow said. “And Oklahoma has remained vibrant.”

Oklahoma also doesn’t have as many sub-prime loans as other places in America, he said.

One of the key parts of Wilkerson’s presentation was a graph of the annual growth in per capita incomes and home prices for both Oklahoma and the United States for the years 2000 to 2005.

Oklahoma’s income and home price remained about the same of about 4.5 percent annual increase for those years. The rest of the country, however, had a large discrepancy. Nationally, annual increases in house prices were about 8.5 percent and incomes were about 3.5 percent.

“That’s the reason why our housing prices hasn’t really dropped as much as elsewhere,” Roggow said.

In fact, Oklahoma is number five in the nation for home price increases over the previous year, Wilkerson said.

Regardless of the health of Oklahoma’s economy, it has been affected to a small degree by the national economic problems, he said.

But any negatives on Oklahoma’s economy probably will probably not last long, Roggow said.

To prove the point, Wilkerson showed a picture of all the states in America and their job creation percentages as compared with the previous year.

Oklahoma is still adding more jobs as compared with last year, but much of the United States is adding fewer jobs, he said.

Wilkerson, who deals primarily with the monetary policy aspect of the Federal Reserve, said that the future of the economy of the United States, however, is highly uncertain.

“We need to turn around the housing sector,” he said. “And we need some certainty from policy makers on where the line will be drawn for who will be bailed out and who will not.”

Wilkerson tries to visit one Oklahoma community a month to do a similar presentation.

Roggow and Wilkerson began talks of visiting Duncan to do this presentation two to three months ago.

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