Oregon Office of Economic Analysis

Quick update. This morning we got the U.S. employment report for December. The headline numbers are bad. We lost 140,000 jobs and the unemployment rate held steady. For an expansion these are horrible figures. But from a macro perspective, it’s important to see through this temporary COVID-related weakness. The losses were concentrated in Leisure and Hospitality and Education. There remained underlying job growth in things like construction and manufacturing. Our office was been talking about the dark winter ahead and how the economy would weaken due to the virus, and being forced indoors more due to the weather. Well, we’re in that now. The good news is the vaccines continue to be rolled out, and another round of federal aid has been passed which includes expanded unemployment insurance benefits for those laid off. The overall recovery remains intact. Even if you know a rough patch is ahead, it always feels worse when you’re actually in it.

With that said, on to Fun Friday. I want to highlight an industry that is rarely talked about. Or, as we will see, we tend to talk about bits and pieces of this sector because it’s a bit of a hodgepodge at the topline. That sector is Information. Here is how it is briefly defined.

The Information sector comprises establishments engaged in the following processes: (a) producing and distributing information and cultural products, (b) providing the means to transmit or distribute these products as well as data or communications, and (c) processing data.

To be honest, I’ve been waiting years to talk about the Information sector. The first draft of this post was from 2015. The sector did come up in our latest forecast release and given the disparate impacts of COVID, now is a good time to actually talk about it and the outlook. But one of the main reasons we don’t tend to talk about it too much is it is relatively small. Pre-COVID, the sector accounted for under 2 percent of statewide jobs. Plus in the big picture, employment is basically flat, albeit with some business cycle fluctuations.

But what makes Information interesting is that this topline masks considerable changes beneath the surface. I tend to think of Information in terms of 3 fairly equally sized subsectors, each with their own trajectory.

First there are the tech-related jobs in (prepackaged) software, and data centers. These jobs are growing, and outpacing the overall economy. Second there are the jobs in broadcasting, and motion picture — both in production, and movie theaters. Pre-COVID employment trends here were pretty stable, albeit with some growth. Third there are the jobs in media, publishing, and telecommunications that have been declining noticeably over time. However when you add up all of these different trends, you do get a fairly flat topline picture. It’s a Simpson’s paradox situation, if you will.

Now, COVID has changed this picture and altered the trajectories a bit. First, we have seen a little bit of tech-related weakness but our office expects that to reverse and job growth to remain strong in the years ahead.

That said, by far the biggest changes are seen in Motion Pictures. Actual production of shows and movies was shut down, and of course movie theaters are largely closed as well. There has been some growth in recent months but not much. Our office does expect these jobs to return when it is safe to do so in the months ahead, especially on the production side. However risks to the outlook for movie theaters is real. It’s not a big employment sector — around 2,000 pre-COVID in the state — but one where there may be long-run structural changes. Given some major studios have announced plans to release movies directly to streaming services (exclusively or simultaneously with theaters) even after the pandemic wanes, it does call into question the outlook. Some prognosticators are expecting movie theaters to move away from megaplexes and into more of a boutique business model as a result. Time will tell exactly how it plays out, but it remains something our office is monitoring. Enjoy your weekend!