Oregon Office of Economic Analysis

Tomorrow our office is releasing the latest economic and revenue forecast for the state. We have a lot of new material regarding the outlook to keep you busy during the holiday season. But first, our friends over at the Employment Department released the October jobs data this morning.

Overall, the report continued to bring goods news and the recovery remained intact. To the extent we did see some relative slowing the September data that was fire-related, it looks to have reversed, as expected, in the October data.

A couple additional notes. One, this month’s report incorporated the first round of revisions to pandemic-related data. It looks like the severity of the recession was a little bit worse than the initial estimates indicated, but overall the the cycle remains pretty much the same. (Our office built in these expected revisions to our forecast that will be released tomorrow.) Two, OED highlights the declines in education employment in Oregon. It was clear that education employment was down — see our previous work for more on why and how — but we really need to wait until a month or two into the school year to get the most accurate picture. Education and related employment will not fully recovery until the pandemic is over and schools return to in-person learning.

Speaking of the pandemic, we are at a crossroads of sorts. On the one hand COVID cases are surging across Oregon and around the country. On the other hand, the vaccine trial news continues to be better than expected. As such the end of the pandemic is likely in sight. We just need to make sure we are able to keep the amount of permanent economic damage to a minimum between now and then to ensure a stronger, faster recovery once it may begin in full force. These next handful of months will be our most challenging yet.

The key measures to watch for that permanent damage are the number of business closures and associated layoffs. While the little bit of information we have on real-time closures (bankruptcy filings, liquor license renewals, video lottery retailers reporting revenue) look OK, or at least relative to initial expectations, we know the longer the pandemic drags on the more damage that will accumulate. In fact, now that we are into our ninth month of the pandemic, we are starting to see things like long-term unemployment increase. There are real economic, human, and social costs to long-term unemployment. And we know that the longer someone is unemployed the lower the probability they will find a job becomes, and the higher the probability they will drop out of the labor force entirely.

In order to not end on a down note, I wanted to share one final chart that tries to show that not everything is terrible. I’m borrowing this concept from our counterparts in Washington who use a similar chart that I thought was useful and interesting.

While total spending in the economy remains down a little bit, we have clearly shifted our consumption basket away from services like going out to eat and getting haircuts and more to physical goods. We have been buying RVs and camping equipment to get outside over the summer. We have been sprucing up our yards, remodeling our homes, stocking up on toilet paper, and cooking and drinking at home to a greater degree. And as much as ever before, we are doing so by buying online as opposed to going into stores. As a result, employment in sectors that sell these products, or move, store, and deliver them actually have higher levels of employment today than a year ago. Note that in past cycles, state government tends to increase initially in recessions as more workers are hired to process claims for needs-based programs before traditional budget cuts reduce employment in the year(s) after.

Stay tuned, we have lots more information on the economy and revenues tomorrow with our forecast release.