By Taxpayer Association of Oregon
The media is talking extensively about the economic headwinds coming this fall.
#1. $100 billion shift. As the student loan delays ended, it is estimated by a Wells Fargo economist that $100 billion in spending will be shifted from loan recipients and paid into loan payments. This comes as credit card debt boomed by people who had student loans. It appears that many used their relief to spend more credit. This follows at the same time that 1.7 million people have been moved off of Medicaid as the Covid emergency relief program expired. Spending will surely slow on these two factors. Is Oregon ready for a spending slow-down?
#2. Gas spiking. After a 30% jump, oil prices are nearing $100/barrel and some predict will hit $150/barrel. Experts are predicting a protracted gas price increase season. Oregon has been among the top 10 highest gas price states in the nation. Gas prices will impact all the prices of goods on our shelves. How well will Oregon’s economy perform if it faces higher gas prices upon already high gas prices?
#3. Strike fever. The auto strike has the potential to cause cascading effects through-out the economy that will impact vehicle sales and everything related to it. Oregon has strike fever as well, as nurses and teachers have been engaged in strikes or working on strikes. The inflation pain is setting off all kinds of alarms for workers who feel drowned in higher costs and are demanding higher wages. Since Oregon is in the top 10 highest cost-of-living states, we can expect the pain to be felt even more here. The strikes and push for higher wages will in turn drive up prices, which may increase even more strikes. The State’s largest school district is on a brink of a strike.
#4. Government shut-down. The national shutdown is looking more real at this point. Nearly a million federal workers are in the system that could furlough them or put them into a season of economic strain/uncertainty. Things connected to those near-one million workers will also be impacted. For instance, if national parks close, even for a few weeks, everything connected to it (tourism, hunting, local towns) will be impacted immediately. This will effect spending.
#5. Slow-down. Because record-level of revenue has into State coffers, the Legislature has been back-to-back spending record levels of government expenditures. What happens when record levels of revenue stop coming in? Multnomah County already saw a two billion retreat in tax revenue. Is this a blip or a sign to come?