Oregon Economic Update: The Future is BrightSeptember 23, 2021 After plunging into a deep recession in 2020, Oregon is on track to add the largest number of jobs on record this year. According to the latest forecast from the Office of Economic Analysis (OEA), the state will add more than 100,000 jobs between the fourth quarters of 2020 and 2021. The state will regain all of the pandemic job losses by the summer of 2022.
This recovery is different from past cycles. It will be faster than our emergence from the tech bubble, the housing crisis, and earlier downturns. Major reasons are that we entered the recession on solid footing; it wasn’t caused by a financial crisis, industry collapse, or policy error; there was a swift and strong policy response; and thus far it’s avoided major structural or permanent damage. Finally, unlike the past several ‘jobless’ recoveries, demand for workers is strong.
The key driver underlying OEA’s optimism is the strength of household finances – Oregonians have money to spend. Federal assistance has boosted incomes, and wages have recovered and continue to rise. And if Oregon is like the nation, residents have increased their savings and lowered their debt. Additionally, stock market gains and rising home equity have given households access to greater wealth.
The question is not if, but how much, consumers will spend. OEA’s forecast doesn’t depend on consumers drawing down savings or increasing debt, but rather continuing to spend their growing income.
OEA acknowledges that there are risks to the forecast, and mostly to the downside. The biggest is potential supply side constraints. If firms continue to struggle with labor shortages and can’t hire as quickly as they’d like, a full recovery could be pushed back to later in 2022. OEA also considers the delta variant a risk that could impact consumer spending and demand, but more in the short-term than the longer run.
The OEA's complete report is available at www.oregon.gov/das/OEA/Pages/forecastecorev.aspx.