Oregon Economy Shows Impressive Growth

Tom Potiowsky, the Oregon State Economist, revealed the latest economic news at the June 1st Oregon/SW Washington CCIM Chapter meeting, most of which was quite positive.  Shown below are the highlights:

• Oregon job growth surged in the first quarter of 2011 rising at an annualized growth rate of 5.2 percent.  This is the third strongest quarterly job growth since 1990.  On a year-over-year basis, job growth is up 1.8 percent, the best since the first quarter of 2007.
• The unemployment rate has slowly edged down to 9.6 percent.  This is a full two percentage points below the May 2009 unemployment rate peak of 11.6 percent.
• For the last six months, job gains have been averaging over 4,500 jobs per month.  Oregon has the 7th fastest job growth year-over-year for March among the 50 states.
• Job gains in the first quarter were broad based with virtually all sectors seeing strong growth.  The exceptions to this trend were the wood products industry, and state and local governments.
• Personal income growth increased 3.3 percent in the 4th quarter of 2010.
• The declining value of the U.S. dollar is helping those businesses dependent on exporting their products overseas.  Oregon exports are up a whopping 18.6 percent over the previous year but much of this increase has to do with the abysmal performance from the previous year more than a spectacular increase in 2011.

Some potential concerns or "economic headwinds" as Mr. Potiowsky called them are:

• The federal government needs to get its financial house in order but it can't do it cold turkey.  Substantial cuts in spending could result in weakening an already fragile recovery.
• State and local governments are also in bad shape and represent between 10 and 15 percent of the overall economy.  Forty four states and the District of Columbia are projecting combined budget shortfalls of $125 billion for fiscal year 2012.  How they muddle through will need to be handled carefully to avoid harming the recovery.
• The housing sector continues to languish.  The recent Case-Shiller report indicated a 7.6 percent decline in year-over-year house prices in the Portland metropolitan area.  This will likely continue until the majority of foreclosures have worked their way through the system.
• If the credit crunch does not continue easing, commercial real estate may be even slower to recover than anticipated.  Credit markets are easing, but consumers and businesses still have difficulty getting loans.
• If gasoline prices continue taking up a greater portion of household budgets this will inevitably reduce consumer spending for other goods and services.

Even so, the job growth among a number of employment sectors in the first quarter of 2011 is nothing short of impressive.  The recovery is happening but with a few cautionary signals.  All in all, the economy is certainly looking better than it has for the past 3 years.  Let's hope it continues well into the future.