The Oregon Office of Economic Analysis forecasts the state economy and General Fund and Lottery Fund revenues. This slide presentation is a part of the September 2018 forecast (released August 29th).

1. September 2018
Economic & Revenue
Outlook
August 29th, 2018 Oregon Office of Economic Analysis
Mark McMullen
Josh Lehner

2. Economic Outlook

3. Oregon Office of
Economic Analysis
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•Near-term risks to the upside
•Medium-term term outlook murky
•Demographics
•Fiscal and monetary policy restrictive
beginning in 2020
•Risk of other issues like trade, oil shocks,
housing affordability, climate change and
natural disasters impacting growth
•Recession preparation
The 20/20 Discussion

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Economic Analysis
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The 20/20 Discussion
Drags on 2020 Job Growth:
• Long-term demographics
• End of federal spending bill
• 2018/19 interest rate hikes
feed through
• No more federal tax cuts
• Minimum wage increase
• Census 2020 workers

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Economic Analysis
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Issue: Trade Fisticuffs

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Economic Analysis
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Risk: The Fed Tries to
Thread the Needle

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Economic Analysis
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Recent Performance:
All Regions Growing

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Economic Analysis
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Outlook: All Industries
Growing
Oregon Employment Growth
thousands of jobs
These numbers are adjusted for the reclassification of home health care workers out of Government and into Health Care
beginning in 2018.

9. Revenue Update and
Outlook

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Economic Analysis
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Strong Wage Gains

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Economic Analysis
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Slowing Down

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Economic Analysis
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2017-19 Forecast Summary
(Millions)
2017 COS
Forecast
June 2018
Forecast
September 2018
Forecast
Change from
Prior Forecast
Change from
COS Forecast
Structural Revenues
Personal Income Tax $17,147.4 $17,694.8 $17,772.4 $77.5 $625.0
Corporate Income Tax $1,077.0 $1,273.7 $1,284.8 $11.1 $207.8
All Other Revenues $1,327.6 $1,335.4 $1,388.5 $53.2 $61.0
Gross GF Revenues $19,551.9 $20,303.9 $20,445.7 $141.8 $893.8
Offsets and Transfers -$75.5 -$69.5 -$71.1 -$1.6 $4.4
Administrative Actions1
-$21.5 -$21.5 -$21.5 $0.0 $0.0
Legislative Actions -$180.1 -$179.4 -$179.4 $0.0 $0.7
Net Available Resources $20,055.7 $21,033.8 $21,174.1 $140.3 $1,118.4
Confidence Intervals
67% Confidence +/- 3.6% $742.4
95% Confidence +/- 7.3% $1,484.8
1 Reflects cost of cashflow management actions, exclusive of internal borrowing.
2017-19 General Fund Forecast Summary
$19.70B to $21.19B
$18.96B to $21.93B
Table R.1

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Economic Analysis
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Asset Markets Continue to Rise,
but a Few Large Estates Drive Taxes

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Economic Analysis
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Kickers Over Time

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Economic Analysis
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Timing of Potential Kicker

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Economic Analysis
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What Is Your Cut?
* Based on 2016 actual tax returns ** Based on 2016 actual tax returns, PIT kicker amount ($686 million)
and the Oregon Office of Economic Analysis’ forecast for tax liability in 2018
Income
Group
Adjusted Gross
Income*
Rough Estimate
of Kicker Size**
Bottom 20% < $11,200 $13
Second 20% $11,200 - $26,300 $75
Middle 20% $26,300 - $47,800 $169
Fourth 20% $47,800 - $87,400 $311
Next 15% $87,400 - $177,300 $633
Next 4% $177,300 - $401,200 $1,484
Top 1% > $401,200 $6,787
Average $61,600 $336
Median $35,000-$36,000 $164

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Economic Analysis
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Forecast Changes
Difference from June Forecast, $ millions
17
17
77.5
-107.5
65.4
21.8
11.1
43.6 43.9
49.7
26.5
9.6 11.6 12.3
168.3
-53.5
79.1
37.2
53.2
0.8
-41.8 -46.6
-$150
-$100
-$50
$0
$50
$100
$150
$200
Personal Corporate Lottery Other Total

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Economic Analysis
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Biennial Revenue Growth
18
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-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Personal Income Taxes Total Net Revenue

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Economic Analysis
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Reserves Continue to Grow
Effective Reserves ($ millions)
Jul
2018
End
2017-19
ESF $502.3 $614.2
RDF $581.4 $595.7
Reserves $1,083.7 $1,209.9
Ending
Balance $1,248.4 $1,248.4
Total $2,332.1 $2,458.3
% of GF 11.4% 12.0%
0%
2%
4%
6%
8%
10%
12%
14%
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
OregonBudgetary Reserves (billions)
Educ. Stability Fund Rainy Day Fund Gen. Fund Ending Balance
Forecast -->
Percent of
General Fund -->
Source: Oregon Office of Economic Analysis

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Economic Analysis
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Contact
mark.mcmullen@oregon.gov
(503) 378-3455
joshua.lehner@oregon.gov
(503) 378-4052
www.OregonEconomicAnalysis.com
@OR_EconAnalysis