Oregon's economy could be kicking into higher gear. The rate of job growth accelerated in the first five months of 2013, doubling the average of the past two years (Graph 1). The latest forecast from the Oregon Office of Economic Analysis (OEA) calls for this trend to continue. Growth is projected at 1.9 percent (31,100 jobs) this year, up from last year's 1.2 percent (20,000 jobs). Momentum builds into 2014, with OEA forecasting a 2.4 percent rate of growth (39,800 jobs).
OEA points to several major factors behind their more optimistic outlook. After being a drag on the economy for years, the housing market is finally in solid recovery mode. Sales, starts, and prices are all posting strong gains. OEA quotes Moody's Analytics' chief economist, Mark Zandi, who estimates that each new housing start supports 4.5 to 5 jobs in the greater economy.
Government, the other broad sector that weighed on growth, has stabilized. Following three years of cuts, OEA expects losses to end this year and for growth - albeit modest - to resume in 2014.
In addition, other fundamentals are on solid footing. Business balance sheets remain strong. Profits are high, financing costs are low, and access to capital is improving - paving the way for acceleration in investment spending and growth.
Household balance sheets are improving as well. Debt is down, incomes are up. Stock market gains and home price appreciation have also bolstered wealth, and should support continued consumer spending going forward.
Looking to 2014 and beyond, OEA expects growth to accelerate yet remain below historical growth rates seen during previous expansions. Job gains in 2014 will be broad based with solid growth in most private-sector industries, led by construction (+5.9%) and professional and business services (+4.9%). Oregon should maintain a growth advantage relative to other states, but not as great as in the past.
Barring unforeseen shocks to the economy, Oregon is expected to fully regain the nearly 150,000 jobs lost during the Great Recession in early 2015 - nearly six years after hitting bottom. Meanwhile the unemployment rate, which tends to be one of the last indicators to improve as the economy recovers, will slowly decline to 7.0 percent by 2015.
The OEA's complete report is available at www.oea.das.state.or.us