by Rep. Gail Whitsett
The House Interim Committee on Revenue and the Senate Interim Committee on Finance and Revenue held a joint meeting at the state capitol in Salem on Friday, June 3 to hear about the state’s latest revenue forecast. I made the trip from Klamath Falls to attend the meeting, as I am a member of the House committee.
Two representatives of Oregon’s Office of Economic Analysis informed us of the latest trends relating to employment, the amount of money flowing into state government coffers and other relevant matters.
According to the PowerPoint presentation provided by the analysts, the state’s economy is adding around 5,000 jobs per month. That is 3,000 more per month than they said is needed to keep up with population growth. One of the analysts characterized our economy as being at “full throttle” for employment, but acknowledged that the labor market is still tight and that the levels of workforce participation are still lower than they would be in a fully health economy.
That is an important distinction, as the employment rate is not always an accurate representation of the labor market. It does not include persons who are out of work who did not qualify for unemployment insurance benefits, or whose benefits have expired. Likewise, the unemployment rate does not count persons who have dropped out of the labor force and have quit looking for work.
The state has regained around two-thirds of the manufacturing jobs it lost during the Great Recession, which began in 2008 with the collapse of the national housing market. While jobs in the construction, natural resources and manufacturing sectors have grown at rates above the national average in Oregon, the analysts stated that growth in those sectors is expected to slow down over the next five years.
According to the analysts, manufacturers of metal materials are downsizing their operations. This is a troubling trend, especially in the Portland metropolitan area, where that industry represents a significant portion of manufacturing activity. Much of the economic growth in Oregon has occurred in the more densely populated urban areas like Portland, so any slowdown there will have adverse effects on many of the rural areas that have yet to experience any kind of widespread economic recovery.
Further layoffs are also expected to take place in the durable goods and high tech sectors, with around 2000 of them already having recently happened in the Portland area’s tech manufacturing industry. While the state’s food processing and beer brewing industries are projected to stay strong, the analysts cautioned that exports are plunging severely, which can be a troubling sign of things to come.
Another drag on Oregon’s economy continues to be the high cost of housing, especially in the urban areas. Vacancy rates have been lower than the national average almost every year for decades now. Unfortunately, the supply of available housing remains very low, and new housing starts have simply not kept up with the growing demand stemming from population influxes of residents from other states.
More information can be found in this summary of the forecast, which was put together by the non-partisan Legislative Revenue Office.
Key findings include the fact that taxable personal income has fallen by almost half a billion dollars from the previous revenue forecast in March. And even though taxpayers received income tax “kickers” this year for the first time since the start of the recession, another is not currently projected for 2017.
To watch archived footage of the meeting where the forecast was presented, click here. The next revenue forecast is scheduled to take place September 14.
Representative Gail Whitsett is the Republican state representative representing House District 56 – Klamath Falls