Central Oregon remains in the sweet spot of economic stability, but there are clouds on the horizon.
The red flags are due to national or international economies compared to Central Oregon’s robust and diversified business portfolio.
That was the message delivered by Damon Runberg, Oregon regional economist, and Lindsey Piegza, chief economist for St. Louis-based Stifel Financial Corp., to about 550 business people Thursday at the annual Bend Chamber of Commerce Economic Impact forum.
“There has been strong economic expansion over the last few years, but the pace of growth is slowing,” Runberg told the audience over breakfast at the Riverhouse Convention Center. There are usually highs and lows, booms and busts in any economy, he said, but Central Oregon has shielded itself against it by diversifying its economic base.
“Slower growth has slid us into a labor market that is neither too hot or too cold. That porridge is just right. An equilibrium for the time being,” Runberg said.
“We are in that ‘Money Zone’ where there is enough activity for worker mobility — workers who are able to do so can move up to jobs of their choice — and the demand for labor is not so high that it cannot be filled.”
What is key for Central Oregon to avoid a damaging recession — a decline in economic activity due to a reduction in spending — is having a diversified economy, Runberg said.
“We are entering a deceleration phase, we’re tapping the brakes a bit, but a slowdown is overstating the fact,” Runberg said.
One unit of measurement is payroll taxes that his office uses to monitor economic activity. The problem is that those figures are usually six months behind what is actually happening. For example, early last summer there was a talk of a slowdown because the payroll tax numbers were in from March 2019. That was also the height of winter and snowstorms in Bend, causing a slowdown in buying and selling. By late summer, those number rebounded, he said.
Piegza tempered the talk with a broader outlook of the economy. She noted that while the Federal Reserve lowered interest rates on lending for the third time this year, and the Fed presents a supportive and optimistic view of the economy, yet the trends she sees don’t bear that out.
Consumer spending appears to be the main pillar bolstering the current economy. Yet consumer confidence in the economy is waning. While the unemployment rate is at record lows — 3.5% — there are millions of employable people who are on the sidelines, who have simply stopped looking for work.
And some of those on the sidelines are ages 20 to 55 year olds, who should most likely be sharing the benefits of a robust economy.
Piegza noted that there are five reasons many are not in the job market: An aging baby boomer population, physical disabilities, rising child care costs, which forces a parent to remain home; a “cash economy” whereby online buyers and sellers are not paying taxes; and the opioid epidemic, which is affecting job-able males more than females.
While monthly job growth weighs in at an average 180,000 new jobs; compared to this time last year there are 500,000 fewer jobs being created.
Tech jobs are always a positive for the economy even if they replace more traditional jobs with cost efficiencies, she said. “Those who are engineers, computer programs, will benefit from a tech economy.”
Recession fears are driven by the national agenda; recessions are not local.
“They are macro-economic concepts measured at the national level, Runberg said.
Bad things can happen to the national economy. Shocks to the system, Runberg said.
“Some communities are going to get disproportionately affected depending on their vulnerability to that shock, while others will come out with little impact. We were one of those communities who were hit hard in the last recession, but we were particularly vulnerable to the last shock. Our local community radically diversified in this current expansion,” he said.
“Businesses within our growth industries, particularly the professional sector, wouldn’t necessarily follow the same business patterns. Tourism will always be hit hard. One of the first areas of discretionary spending people cut are their vacations,” Runberg said. “But I wouldn’t be concerned about another Great Recession here in Central Oregon.”
— Reporter: 541-633-2166 or email@example.com