Oregon Employment Forecast: Growth Ongoing, But SlowingAugust 6, 2019 The U.S. economic expansion turned 10 years old this summer, making it the longest expansion in recorded history. Oregon’s expansion also continues, although our job growth is no longer handily outpacing the nation as had been the case for most of the past six years. Not to worry, as growth remains strong enough to keep up with population gains and hold the unemployment rate down at record lows.
Clouds? What Clouds?
Early this year, the word ‘recession’ began creeping back into forecasters’ lexicon when they discussed the U.S. economic outlook. Soft data in the form of a December stock market correction and weakness in retail sales, housing, and manufacturing, combined with the government shutdown and policy concerns, had raised fears that the economy was on the cusp of another recession. But most indicators revived in the spring, consumer spending remains strong, and incomes are rising. The economy is back on firmer ground and talk of an imminent recession has somewhat subsided.
That said, the outlook calls for slowing growth this year and next, both nationally and locally. In Oregon, forecasters from the Office of Economic Analysis (OEA) expect the state will add 39,800 jobs (+2.1%) this year before slowing further in 2020 (32,100 jobs; 1.6%).
Growth will be constrained in part by our tight labor market. Unemployment has been near record lows for nearly three years, and the share of prime working-age Oregonians with a job is back to where it was right before the Great Recession. In other words, most workers who lost their jobs during the recession are now employed, and many who had been sitting on the sidelines have been pulled back into the labor force. So employers must rely even more than usual on their other source of potential employees: people moving into the state. However, migration slowed in 2018 and will likely remain below peak levels (2016-2017) for the foreseeable future, thus limiting job growth.
Oregon’s forecast depends on maintaining three major competitive advantages that have served us well in the past: our ability to attract and retain a skilled labor force; our industry structure; and a favorable climate for new business formation.
It also depends on the national economy. While most leading indicators are leaning positive for the near-term, the next recession is a matter of when, not if. Outside of unforeseen financial or geopolitical shocks, it’s unlikely to happen within the next year. Both IHS Markit, a contributor to OEA’s state forecast, and the Wall Street Journal Economic Forecasting Survey put the probability of a recession over the next year between 25 and 30 percent.
The OEA's complete report is available at www.oregon.gov/das/OEA/Pages/forecastecorev.aspx.