Posted by: Josh Lehner | March 25, 2014

Alpha, Beta and State Comparisons

We know Oregon’s employment growth accelerated in 2013 and while the U.S. continues to add jobs at a 1.5-2 percent annual rate, Oregon is now up around 2.5 percent. This marks the strongest growth rate differential between Oregon and the average state in 7 years. Oregon’s economy is usually more volatile than the U.S. overall as the state falls further in recession but tends to grow more quickly in expansion. If the timing between business cycles is long enough (or the growth strong enough) Oregon typically comes out ahead on net, even with the more pronounced swings. Our office routinely discusses these two aspects of the economy with the Governor’s Council of Economic Advisors and we borrow from the finance jargon when talking about the state’s alpha (stronger on net) and beta (more volatile). The graph below plots Oregon’s employment beta* as it shows Oregon’s net growth rate position relative to the nation. When the orange line is above zero, Oregon is growing more quickly, when the line is below zero, Oregon is growing more slowly or losing more jobs than the average state.OregonBetaWhile Oregon’s trajectory has improved quite a bit and the state currently ranks among the Top 10 fastest growing in the country, there is also more ground to make up locally as the state fell further in recession than most others. Specifically, Oregon experienced the 7th largest job loss across the country and while we are getting there in terms of regaining these losses, Oregon is not yet back to pre-recession levels of employment, let alone underemployment and other measures of labor utilization.

EmpStateComp_0114To sum up current conditions, Oregon is once again growing more quickly than the U.S. overall and making up lost ground after falling further in recession. This is, by and large, the typical pattern the Oregon economy follows. Should the expansion last long enough, expectations are for Oregon to come out ahead when all is said and done. The state is clearly not there yet, but the trajectory has improved to the point where we are getting there.

* This is our office’s quick and dirty beta measure. The official, statistical measure is a single value and does not show the time series aspect as the graph above, but the concept is clearly the same.


Responses

  1. […] 8.4 percent of its jobs during the Great Recession, the seventh largest fall among the states, Lehner wrote in a Tuesday post. The state has recovered about 70 percent of its lost […]

  2. […] positive front, initial jobless were reported at the lowest level seen in 2014.  Speaking of jobs, Oregon’s currently adding jobs at a faster rate than the national economy.  New jobs=New Home Formations so this news is good news for […]

  3. […] positive front, initial jobless were reported at the lowest level seen in 2014. Speaking of jobs, Oregon’s currently adding jobs at a faster rate than the national economy. New jobs=New Home Formations so this news is good news for […]

  4. […] 8.4 percent of its jobs during the Great Recession, the seventh largest fall among the states, Lehner wrote in a Tuesday post. The state has recovered about 70 percent of its lost […]

  5. […] interest rates as quickly as indicated in the post-monetary policy meeting. On a related note, HERE IS Oregon’s latest forecast on job […]

  6. […] interest rates as quickly as indicated in the post-monetary policy meeting.  On a related note, HERE ISOregon’s latest forecast on job […]

  7. […] high-wage and upper middle-wage occupational groups. This is the business cycle kicking in, or the state’s beta kicking in. Oregon tends to outperform during expansions (and fall further in recessions) and the […]

  8. […] interest rates as quickly as indicated in the post-monetary policy meeting.  On a related note, HERE IS Oregon’s latest forecast on job […]

  9. […] fare pretty average, however the longer the expansion, the better Oregon will do. A lot of our growth advantage in good times — our so-called beta — comes from the state’s ability to attract in-migration and our cyclical manufacturers […]


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