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Oregon Economic Outlook Joe Cortright – October 2008
Synopsis <ul><li>Recent Performance </li></ul><ul><li>Key Drivers </li></ul><ul><li>Outlook </li></ul><ul><li>Fiscal Impli...
Recent performance <ul><li>Job growth </li></ul><ul><li>Unemployment </li></ul>
New peak employment
More than offset jobs lost in recession -65 +175
2001 recession hit harder, but Oregon stronger since 2003 Employment Growth
Oregon outperforming now Oregon weaker than US Oregon stronger than US Employment Growth
Oregon outperformed US over past four years
Oregon close to US unemployment rate
Key drivers <ul><li>Cluster performance </li></ul><ul><li>Exports </li></ul><ul><li>New business formation </li></ul><ul><...
Our clusters generally outperform national counterparts
Dollar value down sharply
Exports approach $20 billion Source:  WISERTrade, through 2008Q2 Oregon Exports, Billions
More export oriented Ranking among 50 States
Composition of exports <ul><li>Add detail on value added exports </li></ul>
Start-ups, spinoffs in high tech © Heike Mayer. 2002 -- used by permission 2002
The universe is expanding © Heike Mayer. 2008 -- used by permission 2008
19,000 new businesses since 2001 Rank Oregon businesses with payroll employment
Oregon gaining new businesses faster than US 19,000 new payroll businesses since 2001
Patents
Educational attainment is rising Source:  American Community Survey Percent of Oregon Adults with a Four Year Degree  Conf...
Net migration has rebounded 11 th   6 th  17 th   24 th  10 th   8 th   10th Oregon Rank Oregon net domestic migration, pe...
The housing bubble has burst National data
Prices down 15% nationally National data
Portland lags US housing market
Have avoided worst of housing decline 12 Month Change to January 2008 S&P/Case-Shiller® Home Price Indices
Foreclosures not as bad here Foreclosures, 2008 Source:  RealtyTrac, August 2008
Less affected by housing cycle <ul><li>Oregon Housing Prices Holding Up Better than elsewhere </li></ul><ul><li>Foreclosur...
A sea change in energy prices
We use less gas Ranking among 50 states
Saves Oregon $500 million annually <ul><li>Oregon 426 gallons/person </li></ul><ul><li>US average 494 gallons/person </li>...
Construction now a drag
Two Oregons . . .
The Outlook <ul><li>Nation heading into recession </li></ul><ul><ul><li>Housing bubble </li></ul></ul><ul><ul><li>Capital ...
Job growth slowing since 2006 National data
Labor market may now be worse than 2002 Unemployed, plus part time for economic reasons, plus discouraged workers Source: ...
Things looked good in January January 2008, Three month Change
But have worsened quickly August 2008, Three month Change
Most metros in recession; Portland “at risk” for recession Source:  Moodys.com, October 2008
Oil patch, Boston, DC, Seattle, San Jose are few bright spots Source:  Moodys.com, October 2008
Recent economic performance Ranking among 50 states
Oregon expected to outperform US in job growth Total Non-farm Employment (Annual Percentage Change) Office of Economic Ana...
September 2008 forecast calls for no employment declines <ul><li>2008:  +0.6% </li></ul><ul><li>2009:  +0.7% </li></ul><ul...
A tale of two recessions <ul><li>1990-91 </li></ul><ul><ul><li>National duration 8 months, about the same for Oregon </li>...
Fiscal Implications <ul><li>How well is Oregon positioned to weather this recession? </li></ul>
Oregon relatively strong through 2008Q1 Ranking among 50 states
Not among states facing shortfalls Source:  Council on Budget Priorities and Policies, September 2008
Lack of sales tax insulates Oregon revenues Source Rockefeller Institute; Census Bureau (taxes), BEA (GDP price index)
Reserve funds = $600 million
Risks to Oregon fiscal situation <ul><li>Financial crisis  </li></ul><ul><li>Capital gains uncertainty </li></ul>
So far, credit crunch confined to real estate lending Source:  Moody’s Economy.com, October 6, 2008
Capital gains are significant
And volatile
So far,  I’m completely dry . . .
Oregon Economic Outlook For More Information www.ImpresaConsulting.com
Dow 8,600
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Cortright Obc Oct15 2008

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Draft Oregon Economic Outlook Presentation prepared for OBC October 15, 2008

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Cortright Obc Oct15 2008

  1. 1. Oregon Economic Outlook Joe Cortright – October 2008
  2. 2. Synopsis <ul><li>Recent Performance </li></ul><ul><li>Key Drivers </li></ul><ul><li>Outlook </li></ul><ul><li>Fiscal Implications </li></ul>
  3. 3. Recent performance <ul><li>Job growth </li></ul><ul><li>Unemployment </li></ul>
  4. 4. New peak employment
  5. 5. More than offset jobs lost in recession -65 +175
  6. 6. 2001 recession hit harder, but Oregon stronger since 2003 Employment Growth
  7. 7. Oregon outperforming now Oregon weaker than US Oregon stronger than US Employment Growth
  8. 8. Oregon outperformed US over past four years
  9. 9. Oregon close to US unemployment rate
  10. 10. Key drivers <ul><li>Cluster performance </li></ul><ul><li>Exports </li></ul><ul><li>New business formation </li></ul><ul><li>Innovation </li></ul><ul><li>Educational attainment </li></ul><ul><li>Migration </li></ul><ul><li>Housing </li></ul><ul><li>Energy </li></ul>
  11. 11. Our clusters generally outperform national counterparts
  12. 12. Dollar value down sharply
  13. 13. Exports approach $20 billion Source: WISERTrade, through 2008Q2 Oregon Exports, Billions
  14. 14. More export oriented Ranking among 50 States
  15. 15. Composition of exports <ul><li>Add detail on value added exports </li></ul>
  16. 16. Start-ups, spinoffs in high tech © Heike Mayer. 2002 -- used by permission 2002
  17. 17. The universe is expanding © Heike Mayer. 2008 -- used by permission 2008
  18. 18. 19,000 new businesses since 2001 Rank Oregon businesses with payroll employment
  19. 19. Oregon gaining new businesses faster than US 19,000 new payroll businesses since 2001
  20. 20. Patents
  21. 21. Educational attainment is rising Source: American Community Survey Percent of Oregon Adults with a Four Year Degree Confidence interval of estimate indicated by lines
  22. 22. Net migration has rebounded 11 th 6 th 17 th 24 th 10 th 8 th 10th Oregon Rank Oregon net domestic migration, percent of current population Source: Census Bureau estimates
  23. 23. The housing bubble has burst National data
  24. 24. Prices down 15% nationally National data
  25. 25. Portland lags US housing market
  26. 26. Have avoided worst of housing decline 12 Month Change to January 2008 S&P/Case-Shiller® Home Price Indices
  27. 27. Foreclosures not as bad here Foreclosures, 2008 Source: RealtyTrac, August 2008
  28. 28. Less affected by housing cycle <ul><li>Oregon Housing Prices Holding Up Better than elsewhere </li></ul><ul><li>Foreclosures less in Oregon than CA, AZ, NV, FL </li></ul><ul><li>Housing cycle hitting harder in Central and Southern Oregon </li></ul>
  29. 29. A sea change in energy prices
  30. 30. We use less gas Ranking among 50 states
  31. 31. Saves Oregon $500 million annually <ul><li>Oregon 426 gallons/person </li></ul><ul><li>US average 494 gallons/person </li></ul><ul><li>Difference = 68 gallons/person </li></ul><ul><li>Population x 3.7 million </li></ul><ul><li>Savings = 250 million gallons/year </li></ul><ul><li>Gas Increase x $2/gallon </li></ul><ul><li>Value = $500 million dollars/year </li></ul>
  32. 32. Construction now a drag
  33. 33. Two Oregons . . .
  34. 34. The Outlook <ul><li>Nation heading into recession </li></ul><ul><ul><li>Housing bubble </li></ul></ul><ul><ul><li>Capital crunch </li></ul></ul><ul><ul><li>Energy prices </li></ul></ul><ul><li>Uncharted Territory </li></ul><ul><ul><li>We don’t have economic models that predict what happens to the economy in an financial crisis </li></ul></ul>
  35. 35. Job growth slowing since 2006 National data
  36. 36. Labor market may now be worse than 2002 Unemployed, plus part time for economic reasons, plus discouraged workers Source: Bureau of Labor Statistics National data
  37. 37. Things looked good in January January 2008, Three month Change
  38. 38. But have worsened quickly August 2008, Three month Change
  39. 39. Most metros in recession; Portland “at risk” for recession Source: Moodys.com, October 2008
  40. 40. Oil patch, Boston, DC, Seattle, San Jose are few bright spots Source: Moodys.com, October 2008
  41. 41. Recent economic performance Ranking among 50 states
  42. 42. Oregon expected to outperform US in job growth Total Non-farm Employment (Annual Percentage Change) Office of Economic Analysis Forecast September 2008 Forecast
  43. 43. September 2008 forecast calls for no employment declines <ul><li>2008: +0.6% </li></ul><ul><li>2009: +0.7% </li></ul><ul><li>Compares to three consecutive years of decline in 2001, 2002, 2003 </li></ul><ul><li>But—forecast is bound to be revised downward in January </li></ul><ul><ul><li>“ The recession we have been forecasting since February now looks likely to be deeper and longer than we thought.” Economy.com October 2008 </li></ul></ul>
  44. 44. A tale of two recessions <ul><li>1990-91 </li></ul><ul><ul><li>National duration 8 months, about the same for Oregon </li></ul></ul><ul><ul><li>‘ V’ shaped recession </li></ul></ul><ul><ul><li>1.6% decline in Oregon jobs; 1.5% decline for US </li></ul></ul><ul><ul><li>Oregon ranked 24 th worst </li></ul></ul><ul><ul><li>Inflation at 6.0% </li></ul></ul><ul><ul><li>Oregon unemployment rate peak 7.5% (about same as US), 22 months over 7% </li></ul></ul><ul><li>2001 </li></ul><ul><ul><li>National duration 8 months, about 31 months for Oregon </li></ul></ul><ul><ul><li>‘ W’ shaped recession </li></ul></ul><ul><ul><li>4.0% decline in Oregon jobs; 2.0% decline for US </li></ul></ul><ul><ul><li>Oregon ranked 12 th worst </li></ul></ul><ul><ul><li>Inflation at 3.4% </li></ul></ul><ul><ul><li>Oregon unemployment rate peak 8.5% (higher than US), 37 months over 7% </li></ul></ul>
  45. 45. Fiscal Implications <ul><li>How well is Oregon positioned to weather this recession? </li></ul>
  46. 46. Oregon relatively strong through 2008Q1 Ranking among 50 states
  47. 47. Not among states facing shortfalls Source: Council on Budget Priorities and Policies, September 2008
  48. 48. Lack of sales tax insulates Oregon revenues Source Rockefeller Institute; Census Bureau (taxes), BEA (GDP price index)
  49. 49. Reserve funds = $600 million
  50. 50. Risks to Oregon fiscal situation <ul><li>Financial crisis </li></ul><ul><li>Capital gains uncertainty </li></ul>
  51. 51. So far, credit crunch confined to real estate lending Source: Moody’s Economy.com, October 6, 2008
  52. 52. Capital gains are significant
  53. 53. And volatile
  54. 54. So far, I’m completely dry . . .
  55. 55. Oregon Economic Outlook For More Information www.ImpresaConsulting.com
  56. 56. Dow 8,600

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