Ernie Goss Reported Quotations

Transportation firms reported continuing economic weakness. While 2006 is likely to be a positive year for the Oklahoma economy due to an improving telecommunications sector and expansions in business service firms, the closing of GM operations in Oklahoma City will produce some fairly negative economic consequences.

The trend in economic reports from supply managers in our survey has been fairly positive since October of last year following some of the negative shipping impacts from Hurricane Katrina. Companies with strong ties to the state's growing ethanol industry reported solid growth for February but were very optimistic about future economic growth for this sector.

After growing at a very strong pace in 2005, we are now detecting a slowdown in the pace of growth. Just as nondurable goods manufacturers reported improving economic conditions, durable goods producers detailed a pullback in economic conditions for the month. I expect this slower pace of growth to continue into 2006.

As in much of the region, weather played an important role in pushing the state's index higher. Businesses in South Dakota reported undertaking and completing construction projects for the month that would ordinarily have been sidelined until spring.

The bankers in our survey reported economic weakness across the board for February with readings of 28.8 for retail sales, 44.0 for new hiring and 38.5 for home sales.

Non-durable goods manufacturers, especially food processors, reported much softer economic conditions for the month. On the other hand, durable goods producers detailed solid, but not spectacular conditions for February.

The Kansas economy began the year on a somewhat softer note than the rest of the region. However, firms reported solid job growth for January with durable goods producers detailing much stronger conditions than non-durable goods firms in the state.