OSU economists update 2026 forecast as growth slows, Oklahoma faces energy headwinds
Wednesday, January 28, 2026
Media Contact: Stephen Howard | Director of Marketing & Communications | 405-744-4363 | stephen.howard@okstate.edu
The economic outlook continues to be highly uncertain as progress in reducing inflation stalls and the labor market weakens, according to a new forecast report from the Center for Applied Economic Research (CAER) at Oklahoma State University.
Drs. Dan Rickman and Hongbo Wang, Spears School of Business faculty members and CAER economists, authored the report as an update to the annual outlook issued in November 2025.
The updated report projects that data will show U.S. GDP growth to have slowed in late 2025 following a strong third quarter. Slow growth is forecast to continue in early 2026 before rebounding the rest of the year and then slowing again in 2027. Offsetting the negative headwinds to the economy from tariffs and stricter immigration policy are the construction of data centers across the country and the wealth created by the boom in AI stocks.
The Federal Reserve cut interest rates for the third time in 2025 last month, lowering the federal funds rate to a target range of 3.5-3.75%. Fed officials have said additional cuts are not guaranteed and will depend on economic conditions. The report finds monetary policy is now close to neutral.
Rickman and Wang summarized their Oklahoma forecast with this statement: “Oklahoma’s outlook broadly mirrors national trends but faces additional challenges with weakness in energy sector employment.”
Oil prices are forecast to decline into 2026 before recovering modestly by 2027, while natural gas prices are expected to rise in the near term due to increased global demand for liquefied natural gas. While employment in the state exceeds pre-pandemic levels, job growth is expected to lag the nation through 2027.
Despite rising unemployment rates, the report finds no evidence that either the U.S. or Oklahoma economies are currently in recession. Recession risks remain from geopolitical turmoil, tariff and immigration policy, potential federal government shutdowns and whether the Federal Reserve correctly balances inflation risks against further labor-market softening.
CAER continues the long-standing tradition of OSU economists’ involvement in public policy analysis, regional economic development and economic forecasting. The center is home to the Oklahoma State Econometric Model, the state’s only large-scale econometric forecasting model at a public university.
Visit the website for the complete 2026 forecast, including national, state and industry-level analysis.