• SSTI Creating a Better Future Awards

    Apply today in one of five categories to have your initiative recognized by your peers as a best practice worthy of emulation. Applications are due May 26. Learn more at sstiawards.org.
  • SSTI’s 2017 Conference Registration is Now Open

    Mark your calendars to join your innovation economy peers in Washington, DC on Sept. 13-15 to discuss science, tech, innovation and entrepreneurship and to showcase your impacts for federal officials and legislators. Register today and save with our early bird rate.
  • Become an SSTI Member

    As the most comprehensive resource available for those involved in technology-based economic development, SSTI offers the services that are needed to help build tech-based economies. Learn more about membership...
  • Subscribe to the SSTI Weekly Digest

    Each week, the SSTI Weekly Digest delivers the latest breaking news and expert analysis of critical issues affecting the tech-based economic development community. Subscribe today!

Several energy cluster states in recession

March 01, 2017

The perils of regional economies being too dependent on single industry clusters, particularly as it affects the financing of state governments, are playing out in the Great Plains. Kansas, New Mexico, North Dakota, Oklahoma and Wyoming have been or still are experiencing recessions, beginning as early as spring 2015 for two, according to a new analysis by Jason P. Brown for the Tenth Federal Reserve District.

Testing two different approaches for assessing economic status, Brown’s review of national and state recession occurrences during the past 36 years found states whose economies are heavily dependent on the energy sector experience more recessions than the nation overall. Fortunately, for most of the energy states, recessions are usually shorter in duration than national downturns.

Until the Great Recession, the business cycles of the states in the Tenth Federal Reserve District heavily dependent on the fossil energy cluster tracked well with non-energy states. Beginning in winter 2009, a strong divergence began, that appears to be expanding still. Those Tenth District states with more diversified economies are performing twice as well as the energy cluster states.

Brown’s analysis suggests Kansas, New Mexico or Oklahoma were still in recession as of September 2016, Wyoming’s downturn appears to have ended in July 2016. Regardless, over-dependence on the energy industry is still playing out in each state’s tax revenues. All five of the states listed above are facing sizable budget deficits and cuts to the areas that could help diversify the economic base, such as higher education and innovation. 

Kansas, New Mexico, North Dakota, Oklahoma, Wyomingenergy, clusters