Oregon Economic and Revenue Forecast, September 2024
August 29, 2024
by Josh Lehner
The economy has transitioned out of the inflationary economic boom and into what will hopefully become a sustained expansion. So far the Federal Reserve appears to be threading the needle. High interest rates were needed when inflation was running near double-digit rates, but no longer. The key will be when, and how quickly the Fed adjusts course. Expectations are interest rate cuts will begin next month. This should stabilize and revive rate-sensitive parts of the economy in the year ahead. The labor market is expected to improve as well following the past year where slower hiring has led to a rising unemployment rate, despite layoffs remaining low. While imminent recession fears appear misplaced, the longer high interest rates remain, the probability of recession rises as economic growth slows.
Getting a read on the current state of Oregon’s economy is challenging. Over the entire cycle to date, Oregon’s economic performance has been solid. Employment gains, income growth, and population change are all roughly in the middle of the pack across all states, but a bit below the typical state. Top 15 productivity gains have helped overall growth. However, in recent months withholdings and job gains have picked up. The number of personal income tax returns filed and processed so far this year has increased. These data could be the first indication that Oregon’s patterns of growth have shifted out of the pandemic era lull, and back toward something more like the typical expansion. However, they could also be more noise than signal. Only time will tell. For now, the economic forecast remains essentially unchanged compared to recent outlooks. These green shoots of stronger gains indicate there is more potential upside than believed in some time.