Whether it’s moderate or severe, a financial stress test finds Oklahoma is not prepared for the next national recession.
Moody’s Analytics’ study says states need at least 10 percent of their budgets in reserve funds to weather a moderate recession, and 16 for a severe one on par with the Great Recession.
Oklahoma has about 4 percent saved, making it the third-worst prepared state for an economic downturn, behind North Dakota and Louisiana.
"There is one major reason for that, and that is that Oklahoma has arguably been in recession for a little bit of the last two years from the energy downturn that we saw in 2014. So, most of the states in our analysis have not been in recession for eight years," said Dan White, the director of fiscal policy research at Moody's Analytics.
Under Moody’s models, a moderate national recession would mean a $971 million hit to the state. A severe recession would mean $1.6 billion. White said the state needs to focus on building its savings account over the next several years.
"Because we can't say too many things with a lot of certainty in the field of economics, but one thing I can say with 100 percent certainty is that there's going to be another national recession, and it's going to come probably sooner than most of us expect," White said.
The state's current budget crisis, however, is going to delay any building of Oklahoma's savings.
"It would be more harmful for the economy to be shorting funding for education, funding for basic services just to build up this rainy day reserve fund," White said.
Moody's didn't have Oklahoma's 2017 financial data for its financial stress test. It was unavailable because of the state's budget uncertainty.
