Oregon economic outlook

University of Oregon economist Tim Duy has written a very insightful piece on the state’s economic outlook titled Oregon’s done with the days of rosy revenue forecasts.   His key point is that the state’s economic growth rate driven by the Intel development and the coincidental tech boom is gone and doesn’t appear to be coming back.

Duy states that “the tech recession fundamentally changed the trajectory of employment growth and, consequently, revenue growth for the state…The reality, as we now know, is that Oregon’s economy was not recession-proof. Not by a long shot. The 2007 recession cost the state 149,000 jobs and, more importantly, once again reset the trajectory of job growth… assuming job growth returns to the 1973-2000 trend…the shortfall between this trend and the last is massive, currently 300,000 jobs or 19 percent of current nonfarm payrolls. The gap between the current and post-2000 trends is even wider. What was a troubling fiscal position became an impossible one. “

Duy also notes that:

“the steady decline in average wages relative to the rest of the nation. From 1987 to 1997, average wages increased from 88.9 percent to 94.3 percent of the U.S. average for the brief period Oregon rode the tech boom. Unfortunately, that trend ended even before the 2001 recession, and wages fell back to 89.4 percent of the U.S. average by 2008. Interestingly, this trend occurred even as development officials convinced themselves that young “creatives” are flocking to the state, fueling growth in high wage jobs. The data suggests otherwise — relative job quality is declining.”

Not only has the absolute job base shrunk drastically, but the wage level of remaining jobs is worse.  This will result in lower in-migration levels, if not outright out-migration.

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