Growth in Deschutes County’s Economic Output Slowed Dramatically in 2019

by Damon Runberg

January 6, 2021

The Bureau of Economic Analysis recently released the metropolitan area annual gross domestic product figures for 2019. Today these feel like ancient history as they are a reflection of gross economic output before the pandemic began, a simpler time. Yet, these estimates are important for understanding the economic conditions before the onset of the pandemic and they will be the benchmark that we measure our current recovery against.

As a reminder, gross domestic product represents an estimate of the total dollar value of all goods and services produced in a given geography over a specific time. It is the economy's output. The majority of this output is market production, meaning those goods and services produced for sale in the market. However, a portion of GDP is non-market production, such as education services provided by local governments or management of our public lands. Gross domestic product is equal to the value of final goods. For instance, if a business produces cogs (intermediate product) for clocks (final product) then their production is not directly counted in GDP. Instead GDP measures the value of the clock (final product), which theoretically includes the production value of the individual cog.
Real GDP (inflation adjusted to 2012 dollars) rose by more than $188 million between 2018 and 2019 in Deschutes County. This may seem like a substantial increase, but it was the slowest annual rate of increase (+2.2%) since 2011. This dramatic slowdown in growth in the economic output of Central Oregon is largely due to lower rates of growth (or declines) in a few major industry sectors.

Between 2017 and 2018 gross output for the construction sector grew by 10.5%, but output actually declined in 2019 by 1.3%. The manufacturing sector grew by 9.4% in 2018, but only 3.0% in 2019. Similar patterns of slowing rates of growth in 2019 were seen in the real estate sector and tourism. The only major industry sector where gross output grew at a faster pace in 2019 was professional and business services, which was largely unchanged in 2018 but grew by over 5% in 2019.
The slowing growth in output isn’t particularly concerning for Deschutes County as the past decade has been a period of extraordinary growth far outpacing other neighboring metropolitan areas. Gross output was roughly 66% higher in 2019 than in 2010. For context, the rapidly growing economy of the Boise metropolitan area (+39%) was far outpaced by Deschutes County over the last 10 years.

The pandemic has significantly impacted gross domestic product across the nation. National GDP in the second quarter of 2020 was down 9% from the second quarter of 2019. There was marked improvement in the third quarter, but levels of output nationally still remained down around 3% from third quarter 2019. Deschutes County’s employment recovery from the pandemic shock has followed a similar pattern to the nation and as a result we would also expect GDP to follow along a similar pattern. This means that is a near certainty that gross output has declined in 2020 compared with 2019, the first annual GDP losses since the Great Recession.


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