'Recession all but certain,' Wyoming economic report states - Casper, WY Oil City News
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‘Recession all but certain,’ Wyoming economic report states

While it has now reopened, The Gaslight Social in Casper closed due to COVID-19 on St. Patrick’s Day, March 17. (Dan Cepeda, Oil City)

CASPER, Wyo. — The State of Wyoming Economic Analysis Division released a fourth quarter 2019 economic summary on Tuesday, March 31, 2020.

The report notes that many economists think that the COVID-19 coronavirus will have wide-ranging economic impacts.

“The fallout from coronavirus pandemic is expected to have a significant negative impact on the U.S. economic prospects,” the report states. “Millions of jobs will be lost and the drop in economic output may surpass a trillion dollars in 2020.”

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“A recession is now all but certain, according to leading economists across the country, including Wall Street Journal survey of 34 economists, and the GDP could plunge in the second quarter.”

The extent of the economic downturn is still unclear, according to the report, though it adds that the global economy is facing problems due to the virus.

“According to Moody’s Analytics, COVID-19 has created a worldwide economic tsunami,” the report states. “The global economy was already engulfed in a serious downturn. Just how severe and how long the global pandemic will turn into is still highly uncertain, but it is clear that the more widespread and virulent the virus, the greater a global downturn.”

“In the midst of the global pandemic, businesses worldwide are disrupted, and many schools and daycare centers are closed, making it difficult for parents to work. International travel and trade are impaired, and stock prices decline.”

Banks and governments have been acting to quell impacts to the economy.

“Global central banks and governments are increasingly aggressive in responding to the health and economic crisis by slashing interest rates, engaging in additional quantitative easing, reducing capital requirements
to their banks, appropriating funds to address the crisis, and providing discretionary fiscal stimulus that includes more government spending and tax cuts,” the report states. “The malicious virus is not only a personal health threat, but also a supply and demand shock to the economy.”

The report gives information about other economic indicators for Wyoming’s economy prior to the outbreak reaching the state in fourth quarter 2019.

That includes data about employment.

“After the severe downturn in 2015 and 2016, Wyoming’s economy experienced a year of strong rebound from the fourth quarter of 2018 to the third quarter of 2019,” the report states. “However, the recovery slowed down tremendously in the fourth quarter of 2019.”

Overall employment “barely grew” with Wyoming adding 350 jobs during the economic quarter. The report adds that unemployment say at 3.7%, “slightly higher than the national average.

“The construction industry added the largest number of jobs, mainly due to
activities in utility construction such as oil pipelines and wind power projects,” the report adds. “Manufacturing, wholesale trade, financial activities, and private education & health services experienced moderate growth, about 1.0 percent, respectively.”

“Employment in services where a large number of jobs are located such as retail trade and leisure & hospitality showed larger losses in a year-over-year comparison. The state’s pivotal industry, mining (including oil & gas extraction), lost 300 jobs, or 1.4 percent from the previous year.”

The report also examines data about Wyomingites’ personal income and earnings, which grew 4.2% compared with fourth quarter 2018.

“U.S. personal income increased 4.1 percent during the same period,” reads the report. “Personal income is the income received by all residents from all sources. It is the sum of wage & salary and proprietors’ earnings; property income (dividends, interest, and rent); and personal transfer receipts
such as Social Security Income, Medicare and Medicaid benefits, veterans benefits, and other income benefits and assistance.”

“Total earnings in the state grew 5.4 percent annually in the quarter, while property income and transfer receipts increased 0.4 and 7.5 percent, each. Earnings in most sectors demonstrated expansions from a year ago, led by the farm sector’s growth rate of 129.8 percent. Construction also showed strong growth of 14.8 percent. The mining industry experienced a moderate increase from the previous year.”

Home prices in Wyoming jumped 5.8% compared with fourth quarter 2018, compared with 5.1% increases nationally.

“In Wyoming, single-family building permits for new privately-owned residential construction in the fourth quarter of 2019 were 6.0 percent higher than the previous year level,” the report adds. “Both mortgage delinquency rates and foreclosure rates in December were lower than last year, according to CoreLogic. The U.S. house price appreciation remained the same after decelerating in six consecutive quarters on an annual basis.”

“The decline in mortgage rates, down more than one percentage point for fixed-rate loans from last year, has supported rise in sales activities and home prices. Still, many households are facing affordability challenges because of the sharp run-up in prices over the past several years. The supply-side constraints on the housing market remain tight, and inventory-to-sales ratio for existing homes are still extremely low. However, the sharp downtick in both near-term housing demand and supply will mirror the economic shock inflicted by COVID-19.”

(Wyoming Economic Analysis Division)

The report provides further details about sales and use tax collections in the state.

“Based on sales and use tax collections, total taxable sales in the state grew 2.8 percent to $4.9 billion in the fourth quarter of 2019,” it states. “Increases occurred in most economic industries, with double-digit growth rates in wholesale trade and professional & business services. Information and automotive, machinery and equipment rental & leasing also experienced a year-over-year expansion of around 8.0 percent.”

“The mining sector (including oil & gas extraction), however, contracted 14.9 percent due to declining sales of equipment, supplies, and services from energy exploration and production activity, and this was the largest year-over-year drop since the fourth quarter of 2016 – before the economic recovery. The utilities and construction sectors, which are closely related to mineral development and production, also showed significant decreases of over 10.0 percent, respectively.”

Retail trade grew 18% in the fourth quarter of 2019, which accounted for the largest industry in terms of sales tax collections.

“However, this strong increase was mostly attributed to the increasing number of tax submissions from remote sellers,” reads the report. “Across the state, 10 out of 23 counties experienced increases in taxable sales, led by Carbon County’s 89.7 percent, followed by the 24.8 percent in Converse.”

“Platte and Sublette counties suffered the largest declines, -32.8 and -24.8 percent, each, possibly reflecting a slowdown in conventional natural gas exploration and pipeline construction.”

Yellowstone National Park visitors reached 212,473 in the fourth quarter of 2019, down 16.4% from 2018. Grand Teton visitors were down 6.6%.

“Visitation figures in 2016 were the highest ever, due mostly to the national parks’ centennial celebration,” the report adds.

Lodging sales in Teton County were down 20.1% compared with fourth quarter 2018 and were down 3.6% statewide.

“Visitation to the state during the August 21, 2017 solar eclipse probably compromised the comparison for the third quarter of 2018,” the report adds. “In general, the primary drivers for the fluctuation in lodging sales are visitations to the national parks and mineral activities in the state, but the sales change in Teton County’s winter season is mostly driven by ski activities.”

The report also looked at the state’s agricultural industry.

“The index of prices received by farmers for all U.S. livestock and products remained the same in the fourth quarter of 2019, but the price level was slightly lower than a year ago,” it states. “Between the fourth quarter of 2014 and 2016, farm earnings in Wyoming experienced a dramatic downward trend amid strong supply and weak global demand for beef products, but they have stabilized since then, and even accelerated in 2019.”

“The January 1, 2020 inventory of all cattle and calves in Wyoming totaled 1.32 million head, up 2 percent from the January 1, 2019 inventory, according to the Cattle Survey by the Mountain Regional Field Office of the National Agricultural Statistics Service, USDA. Beef cows, at 724,000
head, were up 10,000 from the previous year. Milk cows were unchanged from last year at 6,000 head. Wyoming’s 2019 calf crop, at 670,000 head, is unchanged from 2018.”

The state’s revenue from investments was the last aspect of the economy considered in the report.

“The amount of investment income distributed to the state general fund, including income from the Permanent Wyoming Mineral Trust Fund and state agency pooled income accounts, was not available for the fourth quarter of 2019, but was 13.0 percent lower from the third quarter of 2018 to the third quarter of 2019,” the report reads. “The huge boosts in second quarters were due to the net realized capital gains being distributed at the end of each fiscal year, which ends on June 30.”

“The $160.4 million in mineral severance taxes generated in the fourth quarter of 2019 was higher than the previous quarter, but it was a decline
of 12.2 percent compared to the fourth quarter of 2018.”

The Wyoming Department of Health provides COVID-19 case, variant, death, testing, hospital and vaccine data online. The department also shares information about how the data can be interpreted. COVID-19 safety recommendations are available from the CDC.