Oregon Office of Economic Analysis

Large urban economies have tended to suffer the most during the pandemic. Portland has been no exception. If we look at the latest employment data here in Oregon it shows that Multnomah County has the largest job losses in the state relative to pre-COVID peaks*.

Much of the urban losses can be tied directly to things like the substantial decline in business travel and the increases in pandemic-related working from home where folks stay home and do not travel into downtown. Our urban cores depend so much on being a hub of activity. Local bars, restaurants, and retailers rely on daytime foot traffic from commuters working in office buildings, and evening foot traffic from travelers, and residents heading downtown to go out to eat, take in a show, and the like.

All of this we know. It’s what we’ve been talking about for much of the past year. The key question is what does it look like moving forward? Here we have a couple of pieces of new information that show a rebound, albeit an incomplete one.

First, video lottery sales are rebounding strongly across the state. The past 5 weeks of video sales are the 5 largest in Oregon’s history. We know the vast majority of households have the income, and that pent-up demand for entertainment is very real. The strong video sales confirm that at a macro level there is not much hesitancy on the part of consumers to resume normal pre-pandemic activity.

If we really dig into the lottery sales data, thanks to our friends at Oregon Lottery, it shows that the downtown core of Portland is likewise seeing a strong rebound. Video sales downtown are nearly fully recovered to where they were pre-pandemic. Even so, downtown is lagging the regional and statewide trends a bit as seen in the chart below. As the economy reopens, foot traffic is picking up and consumers are returning but this data is an indication that downtown Portland hasn’t fully recovered as of yet. OpenTable diner counts seem to confirm a similar pattern as well**.

The second piece of data is an update on the pandemic-related working from home which is only really available at the statewide level if you crunch the numbers yourself. Here we can see that while there has been a decline since the shelter in place phase of the cycle ended, there are still 25-30% of West Coast workers who are telecommuting due to the pandemic. This decrease in the number of commuters heading into downtowns and office parks impacts the broader cluster of activity that builds up in these places. Note that in the U.S. March numbers that came out last week, this percentage did tick down again, after stalling out in the past 6 months or so. Expectations are this figure will continue to decline as the pandemic wanes and more workers are recalled to the office.

Finally, based on the daily TSA passenger counts, air travel is picking up noticeably in the past few weeks. U.S. air travel is now up to 60-65% of 2019 volumes whereas in February it was more like 40%. Over on our COVID-19 tracking page, we report monthly passenger counts at PDX which as of February show no real increases. However given the national patterns, we would expect the local ones to show similar gains when the data do become available. It is thought that most of the recent increases are leisure travel, while business travel remains depressed. Based on informal conversations, expectations are that business travel won’t rebound until 2022 or even 2023. Even so, any increase in air travel will better support urban economies in terms of hotel occupancy, ground transportation, and bars, restaurants, and retailers.

All told, as ECONorthwest’s John Tapogna has said recently, for a big city, Portland appears to have fallen into an average sized hole economically speaking. Of course this is then followed up with the concerns of what the recovery path looks like and whether Portland may lag other big cities around the country. No doubt challenges remain from the pandemic itself (Multnomah is moving back into high risk) to commercial real estate, houselessness, social justice, and clashes of violence. Ultimately the outlook for the urban core rests on the number of workers returning to the office, and the demand from residents wanting to live near all the urban amenities that cluster in such places. After acknowledging and discussing these challenges, Mr. Tapogna also says “don’t bet against Portland.” Our office is also bullish on the outlook in terms of office workers returning, migration flows picking up, and residents wanting to return to the core for nightlife entertainment. The strong rebound in video lottery sales in downtown Portland is our first real data point that shows this recovery process, while clearly incomplete, is already underway.

* We get the March jobs report for counties in Oregon on April 20th.

** OpenTable data is reported as “city” data but really encompasses the broader region, even as the urban core of Portland looks to have an outsized share of restaurants that use the software