CREATING A STRONG ECONOMY
represent downside risks to the outlook. On the other hand should telecommuting and remote work increase as a result of the pandemic and changing business practices, Oregon stands to take advantage. Previously when Oregon faced double-digit job losses and unemployment, the recovery took five years once underway. All told, our office expects this cycle to be faster given the stronger economy before the pandemic and the
somewhat limited amount of permanent damage to date. Expectations are Oregon’s labor market will return to health by mid-2023. Even so, growth is likely to slow in the months ahead as the easy economic gains related to the recalls play out, the loss of federal support weighs more on consumers, and concerns over the spread of the virus increases in the coming, colder months.
Oregon Economic and Revenue Forecast September 2020 | Volume XL, No. 3 Oregon Office of Economic Analysis T he economy remains in a Great Recession-sized hole. However given the nature of the cycle to date, diverging trends have emerged. In particular, lower- income households have borne the brunt of the recession. The combination of higher-income households being less impacted to date, and the large federal support means consumer spending and tax collections have held up much better than expected. The strong economic growth in recent months is encouraging, as many workers on temporary layoffs are recalled. However, normally it takes a year or two for the recessionary shock to work its way through the economy. When the outlook darkens, firms usually don’t fire their workers immediately. Only over time, when the phone starts ringing less, do weak sales lead firms to cut back on parts and labor. These spending cuts in turn leads to lost income for suppliers and workers who reduce their downstream spending accordingly. This traditional recessionary dynamic is just getting under way, even though the labor market is improving due to thousands of temporarily unemployed workers returning to their jobs. Overall the current state of the economy is much better than feared at the time of the previous forecast. But the economic outlook in the years ahead is only improved modestly. It takes time, even under the best of circumstances to regain lost ground due to recessions. 2020 so far is anything but the best. In the near-term Oregon’s economy is impacted by COVID-19 and the wildfires that destroyed our communities. Over the long-term, Oregon’s ability to attract and retain skilled, working-age households is one of our comparative advantages. To the extent the pandemic, wildfires, drought, or protests and clashes of violence impact this advantage remains to be seen, but they all
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The Business Review | October 2020
October 2020 | The Business Review
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