Posted by: Josh Lehner | November 22, 2022

Thankful, 2022 Edition

It’s been a challenging couple of years. At the surface level, particularly for economic data most things are back to normal, even if there are clearly some lingering impacts on society and our daily lives. This Thanksgiving week I just wanted to share three charts I’m thankful for.

First, as we have tragically learned, pandemics are deadly. We have lost about 11,400 more of our neighbors, family, and friends here in Oregon than we would have expected in recent years. For that I am not thankful, but depressed. What I am thankful for is that the pandemic has waned. Deaths today in Oregon are nearly back down to where they were expected to be based on our office’s pre-pandemic demographic forecast. A return to normalcy in the most vital way.

Second, there has been no real permanent damage or economic scarring in the labor market. In fact the argument is the labor market is too strong, and certainly not too weak unlike the weak recoveries from recent recessions. Importantly these gains are widespread reaching workers in different geographic locations, workers of different races and ethnicities, and workers with different levels of educational attainment. The employment rates by educational attainment here in Oregon are higher today then they were pre-pandemic. These are the highest employment rates we have seen since before the Great Recession or the dotcom bust.

Third, income growth has boomed, putting more money in our pockets and our bank accounts. Yes, our strong household finances are a key reason why the underlying trend in inflation has risen, but stronger finances is still a good development. Income growth here in Oregon has been stronger. In the just released 2021 county and metro income data, Oregon’s metros have all outpaced the nation. Grants Pass, Bend, Salem, Albany, and Medford all among the 10 percent strongest increases among all U.S. metros.

Even more reasons to be thankful is the income growth among all households. Here is what we wrote in our most recent forecast doc:

Last quarter our office flagged the possibility for differences across the distribution when it comes to household finances. Given income and wealth inequality in the U.S. and here in Oregon, many of the topline economic data on income and spending are driven by high-income households. The concern was low- and middle-income households could be falling behind due to high inflation and any slowdown in the economy.

Thankfully this does not appear to be the case. New data through the second quarter from both the Federal Reserve, and the JP Morgan Chase Institute show that low- and moderate-income households are still doing well financially. Checking account balances remain strong and show no deterioration across the distribution. Net worth for all households is higher today than before the pandemic (gray bars). If we narrow the focus to the most recent two quarters where inflation has been the hottest (blue bars), net worth still rose among low- and middle-income households, while high-income households net worth declined along with equity markets. Our office will continue to monitor these quarterly updates on household finances across the distribution.

Happy Thanksgiving everyone.

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