The 2012 economic forecast

| Print |  Email
Articles - December 2011
Tuesday, November 15, 2011
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

Best Foot Forward

July/August 2015
Monday, July 13, 2015
BY CHRIS NOBLE

Whether you're stepping out to work or onto the track, Pacific Northwest shoe companies have you covered.


Read more...

5 things to know about veterans in the workforce

The Latest
Wednesday, July 01, 2015
070215-vetsthumbBY JACOB PALMER | DIGITAL NEWS EDITOR

There are more than 10 million former military members working in the United States.


Read more...

Department of Self-Promotion

Linda Baker
Wednesday, June 17, 2015

061715-awards1Oregon Business wins journalism awards.


Read more...

Apartment Mania

Guest Blog
Thursday, June 18, 2015
4805983977 11466ce1d6 zBY BRAD HOULE | CFA

While most categories of commercial real estate have performed well, one of the most robust has been apartment buildings.


Read more...

Photo log: Murray's Pharmacy

The Latest
Friday, July 17, 2015
OBM-Heppner-Kaplan thumbBY JASON KAPLAN

Photographer Jason Kaplan takes a look at Murray's Pharmacy in Heppner.  The family owned business is run by John and Ann Murray, who were featured in our July/August cover story: 10 Innovators in Rural Health Care.


Read more...

Loose Talk

July/August 2015
Friday, July 10, 2015
BY AMY MILSHTEIN

When gossip crosses the line.


Read more...

Fueling Up for the Climb

July/August 2015
Friday, July 10, 2015
BY GREGG MORRIS

Rita Hansen aims to scale natural gas vehicle innovation.


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