Oregon Office of Economic Analysis

Our office’s work has focused quite a bit on the regional differences in economic recovery and expansion here in Oregon. Along these lines and by request from City Observatory‘s Joe Cortright, who also chairs the Governor’s Council of Economic Adivsors, I have updated our previous work looking at employment growth by metro size across the country. In the big picture, not much has changed in the past year or two. America’s largest metros (the 51 with a population of 1 million or more) have not only seen the strongest gains in recovery, they are growing at faster rates than their smaller metro and nonmetro counterparts. In other words, the gap is widening, even as the rural recovery is real, albeit slow.

In fact, as can be seen below, the largest metros are growing at about 2.5% over the past year, which is faster than they experienced during the housing boom and on par with much of the 1990s.

In terms of the outlook, our office wrote the following in our previous look at this:

The question is what is the normal pattern of growth? Is is the 1980s and housing boom years where most areas grow about the same? Or is it the mid to late 1990s and so far in the 2010s where larger cities outperform? It’s certainly an open ended question, but most outlooks call for continued urbanization of the population and for metro areas to outperform rural economies in general. This is at least partially due to the fact that all those good economic things — agglomeration effects, knowledge spillovers, clustering, etc — happen in certain locations, which are usually bigger cities. The case could also be made that the housing boom was an equalizer in which small and medium sized metros outperformed due to stronger population growth and the associated housing demand and activity that went along with it. This stronger growth also may have pulled some away from the larger cities at the same time. In this version of the story, today’s pattern of growth is simply a return to the expected one, which was interrupted by the housing boom where inflated asset prices/wealth may have impacted location decisions.

Finally, the map below shows such employment changes from 2007 through early 2015 at the individual county level. Counties in blue have more jobs today than back in 2007, while counties in yellow are a few percentage points below. Red counties still have employment levels that are more than 5 percent lower than in 2007.

Interestingly, rural America has actually seen a fairly typical number of counties doing well — compared with their small and medium sized metro brethren — with much of that in the oil and gas regions of the country. Yet the variance here is greater, with employment in 4 out of every 10 rural counties remaining substantially below its pre-Great Recession levels. This dichotomy between urban and rural economies is important from an economic and policy perspective. See our office’s recent report on rural Oregon for more, with many insights and anecdotes relevant to other regions of the country.

Lastly, while Oregon largely fits this narrative with Portland turning around first and outperforming much of the state, the big difference is the fact that Oregon’s second tier metros are booming today. Bend and Salem in particular are growing faster than Portland, and Eugene and Medford are growing well too. As with our state economy as a whole, a lot of this has to do with the fact Oregon always outperforms during expansions, due to our industrial structure and the migration flows. Both of these are in full force today, helping drive our economy higher.