By Joseph Ditzler

The Bulletin

Bend occupies a sweet spot, as far as business cycles go, economist Bill Watkins said Thursday in his annual economic forecast at The Riverhouse Convention Center, in Bend.

But don’t get complacent, he said. Cycles change, and nobody can predict the next downturn in the economy.

For the seventh year, Watkins, executive director of the Center for Economic Research and Forecasting at California Lutheran University, delivered the Central Oregon Economic Forecast.

“This is a good place to be in the business cycle,” he told a morning audience. “Of course, being an economist, I’ve got to tell you that things can go wrong. This is a sweet spot, but you guys know there will be another cycle.”

Meanwhile, expect a high rate of job growth in the coming year, more than 6 percent in Deschutes County, higher than that of either Oregon or the U.S., Watkins wrote in a forecast accompanying his talk. “At that,” he wrote, “we expect that the risk to the forecast is that our forecast is low.”

Business activity may outpace job growth, particularly in Bend, Watkins wrote. However, many jobs created in Oregon will not go to Oregonians, he said. Those jobs require a skill set that employers (Intel, for example) cannot find in the state.

During his talk, Watkins contrasted the relative health of Bend with the lack of much improvement in the economy in Jefferson and Crook counties and elsewhere in the region. He offered no encouragement for the outlook in the rural areas of Central Oregon.

“I don’t know what you can do,” he said. “There is no silver bullet.”

Despite the optimistic outlook for Bend, he said, it’s too closely tied to the economy of California’s Bay Area. Eighty percent of economic volatility in Central Oregon is driven by California.

“When the dog has a problem, the tail really suffers,” Watkins said. “And it hits Bend first.”

Use this time, he said, to diversify away from that tie to California. Regulators there are stifling business growth, the results of which inevitably will filter into Central Oregon, Watkins said.

From a big-picture standpoint, he said, the fall in oil prices will not take much of a bite from the U.S. gross domestic product. Crude oil futures closed Thursday at $44.53, according to Nasdaq.

“At $60 a barrel, we estimate the pop for GDP is 1 percent of GDP,” Watkins said Thursday. “It’s not good if you own Halliburton stock or an oil well, but the rest of us, it’s all good. It’s like a huge tax cut. It’s amazing what it will do for consumption.”

— Reporter: 541-617-7815, jditzler@bendbulletin.com

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