Posted by: Josh Lehner | March 17, 2020

Statement on COVID-19 and the Economic Outlook

The public health and economic landscape has shifted dramatically in recent weeks. Our office continues to assess the damage and identify channels of impact on the economy. Given the scale of the events, economic forecasters are increasing assuming a recession in the baseline. However it is still too soon to know the full extent of the economic damage as solid data remains weeks away. It is likely that until the public health situation improves, or at least the fears subside as health policy plans are announced, the economic damage will continue to mount.

Our office has re-run our forecast models to provide a first look at generic recessionary scenarios based loosely on past business cycles. However a full forecast update will not be available until our next release on May 20th. The coming weeks will allow time for us to analyze updated data, gather input from our advisory groups, and assess the public policy responses that are still being formulated. These are needed before formalizing a new outlook, especially one that will likely represent a sea change relative to recent quarterly forecasts.

Overall, economists struggle in times of such dramatic changes because we lack good, timely data. We probably won’t see the start of the impacts in standard economic data until the March retail sales report (released in April), the April employment report (released in May) and 2020q2 GDP (released in July). That said, there are at least three Oregon-specific data points we are tracking on a daily or weekly basis.

First, withholdings out of Oregonian paychecks are important trackers of the labor market, and of course income tax collections overall. Withholdings are one of the noisiest data sets we have, however data through last Friday (3/13) shows withholdings growing, but weak on a year-over-year basis.

Second, initial claims for unemployment insurance are a great leading indicator and measure of firm layoffs. Initial claims also incorporate some worker behaviors in the sense of how they respond to being laid off. Do they quickly land another job and not file a claim or do they take the time and effort to file the claim and wait for the income support as they search for a job. Weekly initial claims are available with a 2 week time lag, and data through 2/29 shows no causes for concern yet. See the Employment Department’s helpful COVID-19 frequently asked questions for more information for employees and firms.

Third, weekly video lottery sales are the most timely measure of consumer spending in Oregon we have. These too are inherently noisy on a weekly basis, and sales have been growing strong in recent months. Some of the growth early this year is propped up by the kicker, however sales have finally tapered in recent days; beginning with last Friday (3/13). On a weekly basis, last week’s sales were 8 percent lower than the same week a year ago. Negative prints aren’t entirely uncommon, however this decline is larger than the usual noise.

Finally, our office has also taken a first look at the relative sizes of the industries most impacted by social distancing. These include air, ground, and sightseeing transportation in addition to museums, spectator events, lodging, and bars and restaurants. Overall these industries account for 225,000 jobs in Oregon, or 12 percent of all jobs statewide.

See our full set of slides for more information.

 


Responses

  1. This is such an incredible time. People are working differently, learning differently, recreating differently, shopping differently, and eating differently. There are a million little natural experiments going on right now. I hope that researchers are ready to seize the opportunity, and I look forward to learning all kinds of new things after this time of difficulty passes.

  2. With this impact on our economy, which you say could indicate a recession, won’t the Governor’s Executive Order tip the state into a recession for sure. Shouldn’t you recommend to her to withdraw her Executive Order until we recover?

    • Hi Donna, thanks for the comment and concern. I know the Governor has issued a few executive orders related to the health crisis, is there one in particular you are thinking of? Or maybe there is another I’m not aware of offhand. Best, Josh

  3. […] Source: Statement on COVID-19 and the Economic Outlook | Oregon Office of Economic Analysis […]

  4. […] Source: Statement on COVID-19 and the Economic Outlook | Oregon Office of Economic Analysis […]


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