By Doug Marshall
I recently came across the following U.S. employment chart which got my attention and should get yours too.
The chart shows U.S. employment growth by decade from 1940 through 2010. Every decade from the 1940s through the 1990s showed positive job growth of at least 20 percent. But the decade from 2000 to 2009 showed negative job growth. In other words the Great Recession we are currently coming out of has wiped out all employment growth that has occurred during the past decade. Yikes! The chart also shows that we've had some employment growth last year and if it continues through the end of the decade at the same pace it would increase employment by 8.7%.
As revealing as that chart is, more important to us is the employment growth rate in the state of Oregon. Does it follow the national trend or does it chart its own course? As much as we like to pride ourselves that Oregon travels to the beat of a different drummer when it comes to employment growth over the past decade we follow the exact same drum beat as the national economy.
Last week I had the opportunity to hear Tom Potiowsky, the State of Oregon Economist, at the Sperry Van Ness Economic Forum indicate that our current level of employment of about 1.6 million jobs is about where we were in January of 2000. So Oregon is in the exact same situation as the national economy: no net new job growth during the past decade. At the peak of employment, which occurred in the first quarter of 2008, Oregon had about 140,000 more jobs than it does today.
Maybe more revealing is the following chart that compares this recession with previous recessions since World War II. This graph shows the number of months it took for each recession to return to its peak employment. For most recessions it took between 12 and 24 months for employment numbers to bounce back to pre-recession levels.
Only the 1980 and 2001 recessions took longer, 86 months and 51 months respectively. The Great Recession of 2008 is currently in its 34 month and it is forecasted to rival the 1980 recession in length.
Why is this important to commercial real estate professionals? Until the Oregon economy begins adding new jobs commercial real estate (with the exception of apartments) will be, for all intents and purposes, in the doldrums. Employment growth fuels increases in office occupancy rates, it increases demand for industrial output and spurs retail sales. They are all directly affected by job growth. If Tom Pitiowsky's forecast for returning to pre-recession employment levels is accurate we have another 3 to 4 years to weather this economic storm.
