Home Back Issues December 2011 The 2012 economic forecast

The 2012 economic forecast

| Print |  Email
Articles - December 2011
Tuesday, November 15, 2011
Article Index
The 2012 economic forecast
Page 2
Page 3
Page 4
Page 5
1211_WhatsAhead_02About 12 months ago, the economy in Oregon was showing signs of relative strength. Though economic recovery was slow and weak, it was nonetheless recovery. Job losses were down and federal stimulus spending was still shoring up state and local governments, preventing layoffs and maintaining services. But about halfway through 2011, the economy began to sputter.

“We’re kind of caught in between periods of optimism and pessimism,” says Tim Duy, director of the Oregon Economic Forum. “Every time something good happens and you think, this is it, something else happens and pulls us back. That volatility is what’s creating the split between optimism and pessimism.”

In the first half of 2011, Oregon was outperforming the nation, says Joe Cortright, president and principal economist for Impresa, a Portland consulting firm. “But the recovery has lost momentum in the last six months or so, and we’re kind of in risky territory right now.”

Much of what was behind the mid-year and continued slumping was, essentially, more of what’s been hindering the economy all along. The housing market remains almost at a standstill compared to where it was a few years ago. According to the University of Oregon’s most recent Index of Economic Indicators, residential building permits fell below 600 in August — the first time that’s happened in more than a year. The state’s Office of Economic Analysis (OEA) also reported in September that housing-related industries had been adding just 50 jobs per month over the past year; in other recent years, that number was 575 jobs per month.

“The housing market is still very depressed,” Cortright says, adding that home prices are down about 5% this year and between 20% and 25% of homeowners in Oregon and the U.S. are underwater on their mortgages. Typical recoveries in the past have been powered largely by lower interest rates and a housing market that takes off. That hasn’t happened this time around.

Also fueling the slowdown were higher gas and commodity prices, continued pressure in the financial markets, uncertainty in foreign markets like China and Europe and what the OEA dubbed “public-sector pullback.” In most recessions, the public sector feels the impacts later than the private sector. This time was no different, particularly as federal stimulus funds helped maintain state and local government employees and services. Those funds, however, began to taper off this year, and the results have been noticeable in layoffs of teachers and government employees.

According to the OEA, the public sector normally adds 350 jobs each month, but over the past year it has cut 475 every month. Since September 2010 alone, the government sector has shed 7,900 jobs, according to the Oregon Employment Department.

“There had been federal money to put off those kinds of adjustments,” says Tom Potiowsky, a professor of economics and chair of the economics department at Portland State University. “That’s not here anymore. State and local governments are making serious cuts, and state and local government workers spend money in the economy just like everybody else.”

 

 



 

More Articles

November/December Preview: Revenge Forestry

News
Tuesday, October 14, 2014
BY JONATHAN FROCHTZWAJG

Seneca AW46A flare-up in the Elliott Forest raises questions about détente in Oregon’s timber wars.


Read more...

Video: The 100 Best Survey

News
Thursday, August 28, 2014

100-best-logo-2015 500pxw-1OB Research Editor Kim Moore shares some pointers about the 100 Best Companies to Work For survey.


Read more...

October surprise

News
Sunday, October 12, 2014
roundup-logo-thumb-14BY LINDA BAKER

Cylvia Hayes, tabloid vs. watchdog journalism and the looming threat of a Cascadia earthquake.


Read more...

Fast Food Slows Down

September 2014
Tuesday, August 26, 2014
BY KIM MOORE

The ubiquitous fast-food restaurant may be on the decline.


Read more...

Podcast: Testing for Emotional Intelligence with John Hersey

Contributed Blogs
Friday, September 19, 2014
ivbU3sIXBY TOM COX | OB BLOGGER

How can you tell if you, a peer, a subordinate or a job candidate has the emotional intelligence needed to do well?


Read more...

The 100 Best Nonprofits to Work for in Oregon 2014

October 2014
Thursday, September 25, 2014
14BY KIM MOORE

Proud, diverse and underpaid.

Pride in their organizations’ mission, fairness in the treatment of women and ethnic minorities, flexible work schedules — these are just a handful of workplace characteristics that employees of this year’s 100 Best Nonprofits appreciate about their organizations.


Read more...

Gone Fishing

October 2014
Thursday, September 25, 2014
BY LORI TOBIAS

Business has been good to Laura Anderson, leading some to suggest she must be awfully lucky to find such success in a business notorious for failure. But luck’s had little to do with it.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS