Posted by: Josh Lehner | April 19, 2022

Stronger Household Formation in Oregon?

Housing currently faces somewhat contradictory data points. On one hand, housing demand is strong as evidenced by the home sales data and a declining rental vacancy rate. On the other hand, estimates of population growth range from modest at best, slowing more generally, to even small losses, depending upon the region or the data source. Regardless, it is clear there has been no pandemic migration boom in Oregon.

I see three main ways to square these seemingly contradictory data points. First would be the population estimates are too low, or the lagged data has yet to catch up to reality. Second would be the flow of new construction coming on to the market has slowed more than population growth has. Third is an increase in household formation rates among existing residents, which is the most interesting possibility.

We know that household formation rates have declined in recent decades. A small reversal of these trends would boost housing demand more than enough to offset weaker population gains. Such an outcome is possible given the large Millennial cohort is fully aging into their 30s this decade when living with roommates is less common. This can be seen in the chart below of headship rates by age in the Portland region. Headship rates are the share of the population that is a householder (formerly head of household).

There are two important items of note here.

First, headship rates increase significantly in ones 20s and 30s. This is the typical life cycle effect. The increasingly-middle-aged Millennials are right in the heart of these age cohorts. As such, Millennials are now the key demographic and overall driver of the economy. This is the structural, demographic tailwind for housing we have discussed before.

Second, headship rates among 20- and 30-somethings ticked up in recent years. The difference between the light blue and dark blue lines in the chart above may not seem like much at first glance. However it is actually a very substantial change. Among 20-39 years, this increase in just the headship rates is the equivalent to adding about 15,000 to 20,000 more households in the Portland region. That is a huge increase equal to more than a full year’s worth of new housing construction in the metro area. Now, some of this could be in part due to noisy data as the estimates do vary depending upon the exact years of comparison. In particular the 2020 ACS had a low response rate and is based on “experimental estimates” as opposed to official statistics. The good news is we are a handful of months away from the 2021 ACS data being released which will provide another snapshot of headship rates, and one which will be mid-pandemic. The main point here is not to get caught up in the specific calculation but to see how an increase in household formation rates is more than enough to offset slower population gains from a housing market perspective.

A key question is why would household formation rates increase? In the big picture we are probably talking about the same issues researchers were studying pre-pandemic on why household formation was lower. This included worse housing affordability forcing people to live at home longer or with roommates, in addition to things like delayed marriage or having kids, and so on. Changes to these big picture trends tend to be clear in hindsight, after a few years of data confirm any shifts.

So for now we are probably talking more about pandemic-related impacts to household formation. With a deadly, contagious virus going around, people likely wanted more space and to be around fewer people. Recovery rebates, record low mortgage rates, and working from home increased the demand for homeownership. At the same time new rental properties kept coming on the market initially as they were under construction in the years leading up to the pandemic. That meant there were more vacant units to move into. Combining all the above with the underlying demographics and it is not hard to see how household formation could increase in a meaningful way.

Over the longer-term, housing demand will come more from the rebound in migration patterns to Portland and Oregon. Migration is pro-cyclical. People move in search of better opportunities during good economic times. More tangible is the strong, recent rebound in the number of surrendered driver licenses at Oregon DMVs. Housing demand today is strong for structural, demographic reasons and cyclical, migration and economic reasons. That said, with affordability worsening again, will we see household formation slow as well, with fewer single-person households and more roommates out of financial necessity?

Posted by: Josh Lehner | April 15, 2022

Tax Season 2022 Starts Strong

Happy Friday everyone. Just a friendly reminder, next Monday is the personal income tax filing deadline for tax year 2021. You still have a couple of days to file on time if you need it!

Our office’s baseline expectation for tax season combines three things. First, the tax filing deadline is back to being near April 15th, unlike the past two years where the deadline was delayed. As such, the flow of funds, so to speak, should be normal as well. Second, underlying income growth will be strong given the inflationary economic boom. Third, actual tax collections will be tempered some because we will be giving out a record kicker due to our office under forecasting revenues in the 2019-2021 biennium. Given the kicker is administered as a credit on the return the impact on state revenues is to collect smaller final payments or disburse larger refunds, both of which lower the total payments owed in April.

As of last week, final payments are off to a strong start this tax season. It is still a bit too early to tell where exactly they will end up. Peak processing season for our friends over at the Department of Revenue is just getting underway (at least in terms of dollar volume of returns). We will know more in a couple weeks.

Overall our office expects revenues to be more like 2020 (also a kicker payout year) than 2019 or 2021. The key will be just how strong is underlying income growth, including some non-wage forms of income like capital gains. Stock markets were up about 25% last year. Capital gains are not included in the BEA estimates of current personal income, in part because a key piece is taxpayer behavior. Households can choose when to realize their gains, which can either buck or amplify trends in the underlying asset market valuations. We will know more soon, and particularly after the extension filers are processed later this fall.

Our next forecast is scheduled for Wednesday, May 18th when we will update our overall outlook including the latest revenue collection information.

Posted by: Josh Lehner | April 13, 2022

Inflationary Economic Boom Continues

The inflationary economic boom continues. Jobs, incomes, and output are all rising quickly. The economy will reach full employment much quicker than following recent recessions. However, this cycle brings different challenges. For instance, the nation’s large urban economies lag due to increased working from home and lack of business travel. Even so, no challenge or risk today is bigger than inflation. The baseline outlook calls for higher interest rates to cool demand, slowing inflation and ensuring a continued economic expansion. Unfortunately, a boom today leading to a bust in a couple of years is not out of the question should high inflation persist.

This week we got two updated pieces of data confirming the inflationary boom.

First, this morning our friends at the Oregon Employment Department released the March employment report. Oregon added 5,600 jobs last month and the unemployment rate fell to 3.8%. Oregon has now regained nearly 90% of it’s lost jobs and remains on track for a full labor market recovery later this year.

The combination of strong job growth and robust wage gains means overall labor income is booming. These wage gains offset the fading impact of federal aid from earlier in the pandemic. With households flush with cash, they have the ability and are showing the willingness to pay higher prices for goods and services. Remember, supply chains are not broken. Rather they are overloaded due to the strong consumer demand.

This brings us to the second piece of data this week: inflation. In March, the U.S. consumer price index rose nearly 15% at an annualized pace. Much of the increase is due to the oil shock, which are never good news but the economy is better able to handle today. In a half snarky comment, I think it is fair to say that we are at peak inflation. Prices won’t increase at double-digit rates moving forward. But there’s no comfort in that comment, as we know inflation is not costless. The latest U.S. research indicates that 80% of workers have seen real wage declines in the past 6 and 12 month period.

The real challenge is the blue part of the chart above. We know there are some constraints and issues in the economy. The prices of automobiles, hotels, and the recent surge in food and energy prices are all driving headline inflation higher. However, even when we strip those out (gray portions) we are left with an underlying trend in inflation that has accelerated in 2021 and is now running about 4-5% at an annual basis.

Inflation is likely to remain above the Fed’s target this year and into next, but on a slowing trajectory. As supply chains improve and demand cools, the sharp increases in durable goods prices are likely to reverse somewhat. Headline inflation will also slow as the oil shock from the war in Ukraine fades. However, the key items to watch are to what extent service inflation accelerates and offsets the goods declines, and whether wage growth slows from its brisk pace. The interaction between actual inflation, inflation expectations, and income or wage growth all matter here. Right now they are all pointing toward something faster than what we experienced last cycle.

As such, the Federal Reserve is raising interest rates faster, and higher than they previously anticipated. The good news is the economy can withstand higher rates. In fact, the Fed estimates the neutral rate of interest – where policy is neither stimulating nor restricting the economy – is about 2.5%. The federal funds rate today is the range from 0.25-0.5%. Expectations are the Fed will raise rates to close to neutral this year and monitor the impacts. The real question is whether the economy needs restrictive policy to truly slow inflation. The risk is recessions tend to happen after policy becomes restrictive.

But for now, the near-term outlook continues to be bright. A full labor market recovery is just a few months away. Household incomes are rising quickly. Consumer spending on goods is still 19% (!) above pre-pandemic trends, and service spending is nearly fully recovered. The underlying economic risks here are such that goods spending may revert to trend, leading to a manufacturing recession but not an overall recession, and that service spending accelerates further increasing pressure on the labor market (services are labor-intensive) and inflation overall.

Posted by: Josh Lehner | April 8, 2022

Trailing Spouses in Oregon (Graph of the Week)

Trailing spouses are those who follow their partner to another city for work. This is a key topic that comes up frequently when our office speaks to regional audiences. In particular we have discussed this on the coast and in the gorge with business groups and local economic development folks. The basic premise is a family relocates for a job opportunity, typically for the husband, and then the local labor market maybe doesn’t have the same opportunities for the spouse, typically the wife. Generally speaking, the wife sacrifices her career for the advancement of her husband’s.

This week I came across a fantastic paper from Professor Janna E Johnson from the University of Minnesota. Paper here, slides here. Professor Johnson’s research brings together the impact of occupational licensing, how that results in less interstate migration, and then how it impacts trailing spouses. All three of these topics individually are vital, and bringing them together makes for a fascinating paper, to say nothing of how she layers on controls for educational attainment, race and ethnicity, different types of occupations and licenses, having kids and so on.

Bottom line: Migration is lower if the husband holds the license compared to if the wife does, implying husband’s status is a more important factor in determining location. Labor market impacts are greater for women than men. Wives are more likely to leave the labor force or switch out of their licensed occupation, while similarly licensed husbands are largely unaffected. Some of this is driven by women’s tendency to enter occupations with higher re-licensure costs, and some of the migration decisions appear to be timed with life events like having a child, which impacts labor force participation.

Professor Johnson’s paper is interesting and on-topic. It helps answer empirically a lot of the questions asked about these issues. With that inspiration I turned to the same data set she uses in the paper and tried to find some local impacts. Keep in mind these are small sample sizes and I am looking for casual inference and not the full-fledged model Professor Johnson uses. Even so, the Oregon impacts are broadly consistent, as seen below in the latest Graph of the Week.

What this chart shows is the change in employment rates among working-age married couples, where both spouses worked the year before. The bars in the chart are the changes in employment rates relative to the working-age married couples who did not move. As you can see, employment is lower for movers than non-movers. This is to be expected. However, in keeping with Professor Johnson’s findings wives have noticeably larger declines in employment than do husbands. This is particularly true for longer distanced moves.

When it came to our office’s conversations on the coast and in the gorge, part of the discussion was for families relocating from larger communities to smaller ones. This does tend to limit the total number of job opportunities, which may be particularly challenging for the trailing spouse, especially if she holds an occupational license that needs to be re-licensed in a different state.

My first thought is about working from home in a pre-pandemic sense. When people vote with their feet to live in your community, but they don’t find a local job that meets their criteria, they tend to either bring a job with them to work remotely, or they start their own business, increasing local entrepreneurship along the way. The less good outcomes would be having to switch careers to have a job, or dropping out of the labor force entirely.

My second thought is thinking about working from home in a pandemic or post-pandemic sense. With remote work becoming more common, maybe some of these dynamics of trailing spouses will be less challenging for households. However this would only apply to the one-third of occupations that can be done remotely. The vast majority of workers need to be at a physical location to build homes, cook food, or give care. Plus, as Professor Johnson notes in her paper, it’s not always just the actual re-licensing costs, but also the impact of losing your network of clients you build up prior to your move like those working in, say, cosmetology or real estate face.

Overall this is a lot of food for thought on important socio-economic topics. Happy Friday everyone.

Posted by: Josh Lehner | April 5, 2022

International Migration Impacts Oregon’s Labor Market

International migration is one piece of the labor force puzzle. Now, Oregon is not a major port of entry into the U.S. unlike the Californias, Floridas, and New Yorks of the world. However, foreign-born households do find their way to Oregon just like US-born households do. Oregon’s share of the population that is foreign-born (9.8%) is a bit below the national average (13.5%) but ranks 18th highest among all states and DC (2020 ACS 5 year estimates).

The issue is net international migration is at the lowest level in decades according to the latest Census estimates. The pandemic obviously didn’t help, but international migration to the U.S. peaked in 2016 and slowed noticeably in the late 2010s.

In terms of direct labor implications, the number of prime-age, foreign-born Americans and Oregonians hasn’t just slowed, but has declined outright. In Oregon, from 2016 to today, there are 90,000 fewer prime-age, foreign-born individuals. Keep in mind this is a noisy data series and we don’t want to make a mountain out of a mole hill. However, relative to the underlying trend, there are now 68,000 fewer such Oregonians.

Prime-age, foreign-born Oregonians have a labor force participation rate in the 80-82% range depending upon the year. The 68,000 below trend figure directly translates into 55,000 fewer available workers in the local economy. With around 100,000 job vacancies today in Oregon, it sure seems like businesses could use more labor to adequately staff and grow their operations.

In terms of which sectors of the economy are impacted the most, let’s turn to the 2019 ACS data. This provides a pre-pandemic snapshot of the labor force.

Overall, every single industry has foreign-born workers. No industry is likely immune to the slowdown in international migration or outright decline in available workers. That said, goods producing industries like natural resources (crop production), construction, and manufacturing have above-average shares. Also, larger shares are seen in the leisure and hospitality industry, and in addition the parts of professional and business services that include janitorial, landscaping, and waste management.

On one hand, the decline in foreign-born workers is mathematically large enough to basically fully explain the tight labor market. However we know it’s never so simple to just isolate and pull out a small piece of a big network. The labor market is still rebounding from the pandemic, and participation rates are picking up. Migration flows are likewise returning, helping to boost the available number of workers. But it is clear nationally and here in Oregon that international migration, and foreign-born workers are a piece to the puzzle. This is particularly true now that the labor market is structurally tight for demographic reasons as the birth rate declines and the large Baby Boomer cohort continues to retire.

Posted by: Josh Lehner | March 30, 2022

Shifting Labor Market Dynamics

For much of the past two years the major labor market story has been the rebound in the hard-hit, low-wage industries and the strong wage gains seen or needed to do so. Today, low-wage sectors in Oregon still have the largest jobs hole left to fill, but the relative gap with the rest of the economy is much narrower. Strong recent job gains plus upward revisions during the recent round of benchmarking to sectors like retail, and leisure and hospitality means a full recovery is nearly here.

However, as the overall structure of the labor market approaches normal, or at least a new normal that has some structural changes, different drivers and patterns of growth will emerge. The underlying labor market dynamics are shifting in important ways. Specifically, some of the dynamics seen in low-wage industries thus far — namely rising wages but also higher quits rates — are spreading up the ladder into middle- and high-wage industries. Additionally, as low-wage industries regain their employment levels, it means the composition of job gains in the years ahead will be better balanced across sectors, although every sector today is at a different point in recovery/expansion process.

Now, with inflation running hot only the lowest-paid 20% of workers have seen wage gains faster than inflation in the past 6 or 12 months. That means 80% of the workforce are seeing real wage declines. That is, their wages are rising but at a slower pace than inflation. As such, stronger wage gains are beginning to move up the ladder. See the “wage level” breakdown on the Atlanta Fed’s wage growth tracker for more.

A big question here is what are the macroeconomic implications of faster wage growth among higher-paying jobs? One thing is that the purchasing power of a high-wage job is much greater than a low-wage job. A modest wage gain for an accountant or doctor creates more spending power than does a huge wage gain for a fast food worker. As such, as stronger wage growth moves up the distribution, it creates larger and larger dollar increases in total wages earned by the workforce. This is true even as some of the pandemic dynamics lessen as wage growth moderates among the hard-hit sectors and labor supply improves some. You can see this in the chart below.

What this analysis does is take the U.S. labor market and line it up from lowest- to highest-paying industry at the 3- and 4-digit NAICS level, and then creates quartiles of employment (groups of 25% of the total). We then look at the increase in aggregate wages (combined change in employment, hours, and hourly wages) over the past 6 months and compare that to the prior 6 months. You can see the strong, but decelerating impact of gains among the lowest-paid sectors. More evident is the acceleration up the wage scale. Note that the big increase in the second quartile is almost entirely due to employment services (temporary help). Even so, the dollar amount of the aggregate weekly wage increase among the top two quartiles is twice that the changes seen among the bottom two quartiles. Incomes are rising, and the dollar increases are strongest at the top.

These overall shifts in the labor market are important. The economy is moving from recovery to expansion. However some of the pandemic dynamics are not going away. To the extent that wage gains continue to move up the distribution it will boost household incomes by a larger dollar amount, even if the percentages remain strongest at the lower end. Stronger household incomes better support consumer spending, and therefore a continued ability to absorb higher prices. As Fed Chair Powell recently noted (HT: Tim Duy), supply-side healing is likely to come but at some uncertain date in the future. He goes on to say “as we set policy, we will be looking to actual progress on these issues [inflation] and not assuming significant near-term supply-side relief.” In other words, the Fed is raising interest rates to cool the economy and inflation and cannot assume inflation will slow on its own. A key part of that story is strong household finances which look likely to continue.

Finally, as an aside: Our office has done a few public sector presentations recently and one item we highlight is how public sector wages have lagged private sector gains during the pandemic. Some of that may be a slower response in part due to the composition of the workforce, and some may be due to collectively bargained wages that are locked into contracts. Regardless, it is likely public sector wages will rise faster in the year(s) ahead than they have in the past two. This is likely true now that the state and local government quits rate is rising, creating the same type of dynamics experienced by the private sector.

Posted by: Josh Lehner | March 23, 2022

Oregon Usually Grows Faster (Graph of the Week)

Today, Oregon’s economy mirrors the nation during the pandemic. Our employment trends, unemployment rate, income growth and the like are right there with the national averages. This is unusual in the sense that Oregon is typically much more volatile than the U.S. We fall farther in recessions and grow faster in expansions. Given the economy spends many more years in expansion than it does in recession, Oregon usually comes out ahead over the entire cycle. This brings us to the latest edition do the Graph of the Week. Oregon is a small, but rising share of the country. When the lines below are rising, it means Oregon is growing faster than the nation as a whole.

In a way, pretty much all of our socio-economic discussions tie back to this chart. Things like migration and who moves, housing production and prices, industrial structure and wages, household incomes and the like. How do we stack up? Part of the answers lie in the chart above. It shows our stories relative to the national ones. In recent decades that includes Oregon growing a bit faster than the nation.

Posted by: Josh Lehner | March 17, 2022

Spring Break 2022

Next week is Spring Break here in Oregon. It’s the first one in a couple of years that might actually feel like Spring Break. COVID cases and hospitalizations are low, masks are off if you want, and household finances remain strong. There is definitely some pent-up demand for travel, entertainment and fun. Ahead of next week, let’s take a quick look at how real consumer spending (adjusted for inflation) for a number of these categories stack up.

In the chart below, sales are compared to a pre-pandemic trend, which is basically just a counterfactrual of moderate growth. As you can see, most of the travel and entertainment activities are yet to fully recovery, but are showing growth in the past year. The only categories to be fully recovered would be purchases of luggage (we’re ready for vacation!) and going out to eat (which has shifted a bit from more fast-food during the earlier stages of the pandemic, to more sit-down dining in the past six months or so). Other categories like going to the movies, concerts, or amusement parks are still half of what we would have expected absent a pandemic. We are starting to do those more, but still quite a bit less frequently than we used to.

While the spending numbers shown above are national, we have a couple different looks at travel behavior closer to home. First, the latest traffic counts from ODOT show that driving is basically fully back to where it was pre-pandemic. For much of the past couple of years, driving behavior was just a little lower than it had been, but that gap looks to have closed. Oregon does have a slightly larger population today than a few years ago, so on a per capita basis, driving is down a little, but no longer in aggregate.

Second, we have the latest passenger counts from airports in Oregon. As discussed previously, air travel to the state’s regional airports is essentially fully recovered, whereas passenger counts at the state’s largest airport, PDX, remain about 20-30% lower. This pattern is likely impacted by the fact that leisure travel has rebounded strongly, but business travel remains weak.

Third, as reported weekly by Travel Oregon, hotel occupancy outside of the Portland area is above pre-pandemic figures.

Now, given the recent surge in gas prices, if we’re headed out on a Spring Break trip, we will definitely be paying more at the pump to fill up for the journey. An important thing to note is that oil shocks are not good news. That said, Oregon and the U.S. have never been better able to manage an oil shock than today. The macroeconomic impacts will be smaller than in previous oil shocks like those back in the 1970s or mid-2000s. Why?

First, spending on gasoline, or energy more broadly was a record low just a few months ago. Yes, energy spending is rising quickly, but there is room in household budgets to adjust. Second, the energy intensity of the economy continues to decline. The amount of energy it takes to produce goods and services has never been lower. Don’t get me wrong, there will be an impact from the oil shock, but that impact will be more muted than in previous periods; Oregon likely even more so than the nation. And third, the U.S. is an energy and oil producer these days. High oil prices are bad for consumers and business costs, but good for the drilling and mining industry. The net impact on the U.S. economy is the combination of consumer spending, and business investment in new wells and increased mining activity (jobs and wages). High oil prices are not longer just bad news for the U.S.

Finally, getting back to Spring Break, it’s important to keep in mind that this shift in consumer spending back into services is economically important. Services are labor-intensive, and therefore the improving sales of us going on vacations, out to eat and other forms of entertainment is helping drive the employment recovery in the past year and in the years ahead, and will boost the regional economies more reliant upon these industries as well.

Posted by: Josh Lehner | March 9, 2022

Marijuana Outlook (March 2022)

Marijuana sales continue to be strong and are closely tracking recent forecasts. That said, the baseline outlook has called for sales to slow as the pandemic improves and Oregonians continue to return to their pre-COVID lives to a greater degree. That included workers returning to the office a bit more, and other entertainment options opening up and being frequented more often. With increased competition for people’s time and wallet, a bit less would be spent on marijuana, or so the thinking went.

In recent months sales have slowed as expected, both here in Oregon and in other recreational marijuana states like Colorado and Washington.

However, prices are another key factor impacting sales and tax collections. Oregon levies marijuana taxes as a flat rate on the overall sales price. So if consumers are buying the same volume of product but prices increase, then so do taxes.

According to the latest OLCC data, retail prices for both usable marijuana, and extracts and concentrates have fallen 5-10 percent since the summer. These price declines may in part be due to another record marijuana harvest last fall, which was up about 40 percent compared to a year earlier. Regardless of the exact reason, the decline in prices is impacting overall tax revenues even if consumers are not diverting more of their entertainment budget to other options.

Over the medium- and long-term, sales are expected to increase as Oregon’s population, income, and spending grow. However at this point our office does not have a further increase in marijuana usage rates built into the outlook. Marijuana sales are expected to remain a steady share of income and spending.

As such, the risks lie primarily to the upside should usage and broader social acceptance continue to increase in the years ahead. The latest National Survey on Drug Use and Health shows that the share of Oregonians using marijuana in the past month – a commonly used metric to define frequent or regular users – continues to hold steady at about 20 percent of the adult population. Oregon ranks 3rd highest in the nation trailing Vermont and Colorado, while Washington ranks just behind in 4th.

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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