Posted by: Josh Lehner | March 3, 2022

Oregon’s Regional Outlook (March 2022)

Yesterday in Part 1 we took a look at Oregon’s industrial outlook based on our most recent forecast. Today in Part 2 we see how this industrial outlook may play out across Oregon’s regional economies.

So far during the pandemic there is considerable variation among Oregon’s regional economies. Central Oregon’s employment is at an all-time high, Northeastern Oregon is nearly fully recovered, while the Portland region trails the rest of the state. These patterns are in part due to regional income and population trends, and in part due to the industrial structure of each region.

While a detailed local forecast is beyond the scope of our office — see the Employment Department’s employment projections for more — we can take a look at how the local industrial structure is set up for success based on the broader trends built into our statewide forecast.

In the chart below, each major regional economy within the state is shown. On the vertical, y-axis is current employment relative to pre-pandemic peaks. This is a measure of the current state of the economy. On the horizontal, x-axis is a comparison of expected future growth based on the local industrial structure. The calculation is such that if the regional value is greater than 1.0 then the region has a larger share of local jobs in the sectors that are expected to perform well. Conversely if the value is less than 1.0 then the region has a larger share of jobs in industries that are expected to grow slower in the years ahead.

The North Coast’s industrial structure leads the pack almost entirely due to its reliance on Leisure and Hospitality. Even as consumer demand has rebounded, particularly outside of the Portland area, there remains a long way to go in terms of employment. Leisure and Hospitality on the Coast is still 9 percent below pre-pandemic levels, which is better than the 12 percent statewide hole, but clearly not yet complete. The North Coast industrial structure is also pretty typical in terms of Health Care, and Government which should see average gains. Retail is the only sector the North Coast is overweight in that will see slower growth.

Portland’s regional economy is home to the state’s largest concentration of Professional and Business Services, and above average shares in Wholesale, and Transportation, Warehousing, and Utilities. All are expected to grow strongly in the years ahead. The region is also pretty typical for Health Care, and Leisure and Hospitality, two other fast-growing industries.

Central Oregon is home to a pretty diversified industrial structure with larger concentrations in a Leisure and Hospitality, Information (data centers), Retail, and Construction. In a fast-growing region the larger Construction share is likely to be more of a boost than the slower statewide forecast would indicate. The region also has average concentrations in Health Care, Professional and Business Services, and Government which should all see solid gains.

On the other end of the industrial structure spectrum stands Northeastern Oregon. The region has a larger reliance on Natural Resource (agriculture) and Manufacturing, both of which are likely to see slower employment growth in the years ahead. These concentrations have been historical strengths for the region and need not necessarily weigh on the economy, even as medium- and longer-term growth is slower. For example, when commodity prices (wheat) are high, the regional economy fares better.

Most other regions of the state are expected to see average to slightly below average growth based on their industrial structure alone. Of course mapping local industrial structures to statewide trends is not perfect, even if it provides one way to gauge potential strengths and weaknesses. What really matters for longer-run economic growth is the number of workers a regional economy has and how productive each worker is. Key issues to watch are migration trends and changes in the working-age population. Additionally, productivity gains can come from many different types of capital, such as financial, natural, physical, human, and/or social. If a regional economy lacks one source of capital, it is not a deathblow to overall growth. Rather, it signals the area must rely on other types for growth.

Note: I do have an individual county bubble chart but it’s quite messy. Email me if you want a copy with your county or region highlighted.

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