Posted by: Josh Lehner | August 29, 2012

Economic and Revenue Forecast, September 2012

  • Revenue collections in recent months have outpaced the previous forecast, however the economic outlook has been downgraded
  • General Fund revenue for the 2011-13 BN has been revised upward $88 million, while the ending balance is up $97.7 million due to additional borrowing cost savings
  • Lottery revenues are lowered $17.1 million for the 2011-13 BN
  • Due to increasing global concerns the economic forecast has been lowered in the coming years, resulting in lower revenue projections for future biennia
  • The 2013-15 BN General Fund forecast has been lowered $223.3 million while the Lottery outlook has been lowered $95.2 million

This morning our office is releasing the September 2012 Economic and Revenue forecast. All forecast materials, including slides and excel tables, may be found over on our main site. Since our last forecast back in May, revenues and the underlying economy have actually outperformed expectations slightly. Revenues across the board (Personal, Corporate, Estate, Liquor, Judicial) have all come in ahead of projections for fiscal year 2012, the first year of the biennium.

While that is largely good news, the problem becomes the fact that the economic outlook has darkened in recent months. In conversations with our advisors, everyone largely agrees that Oregon as a state is basically performing as expected given the global macroeconomic environment. There do not appear to major Oregon-specific issues and our local economy is being put at risk by external factors.

The fact that global economic growth continues is encouraging. However, this threat of external shocks has placed a burden on businesses and households, leading many to pull back on their spending out of caution. The eurozone recession – and potential crisis – in addition to the slowdown in China and an uncertain U.S. federal policy environment represent three very large risks to the global outlook. These risks are hard to handicap from a planning perspective (and from a forecast perspective) and have created an exorbitant amount of uncertainty about the future. As a result, future plans are being delayed with businesses and individuals holding off on making long-term investments.

Due to a recent string of weak manufacturing, consumer spending, and trade data, a broad consensus of economic forecasters has become more pessimistic about future growth prospects. Similarly, the Office of Economic Analysis outlook reflects somewhat weaker expectations for growth over the next two years. Despite the revised growth rates, the general character of Oregon’s lackluster economic outlook has not changed, with more of the same, slow improvement expected going forward.

The combination of stronger revenues in recent months and a lowered economic outlook moving forward,  results in the 2011-13 BN revenues being largely on-track relative to the previous few forecasts. Where these downward economic revisions show up are in the future biennia revenues. The 2013-15 BN forecast is down $223.3 million on the General Fund (-1.4%) and a further $95.2 million in Lottery (-8.7%). It should be noted that approximately $71 million of the Lottery reduction (~75%) is due to a planned capital replacement program in which the Lottery will replace the existing video lottery terminals throughout the state. Current projections are for this plan to be implemented over four years, covering the 2013-15 and 2015-17 biennia.

For the full forecast document, please visit our main website to access the files.


  1. […] employment is now tracking just a hair above our latest forecast. One item to note is that with the most recent forecast, which included a downgrade to the economic outlook, the projected recovery path now effectively […]

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