PHOENIX — While growth rates and the trajectory of the economy have improved considerably, Oregon is not yet fully healed from recession and may suffer from the retirement of older workers, according to the state's economic forecast.
Oregon's September 2015 Economic and Revenue Forecast, prepared by the state's Office of Economic Analysis and released Aug. 26, showed that the state added 50,000 jobs in the past year for a 3.4% growth rate. That was as good as can be expected given an aging labor force, the report said.
"The current pace of economic growth is expected to be maintained throughout the 2015-17 biennium," the forecast said. "After which time, net growth rates are likely to slow significantly over the longer horizon as the Baby Boomers fully age into their retirement years."
Oregon's unemployment rate rose again slightly over the past few months after falling sharply to begin the year, but average wages per worker are increasing at about 3-4% annually, slightly outpacing inflation and outperforming the U.S. average.
"Unlike the nation overall, Oregon's various measures of wage gains are all increasing above the rate of inflation, producing real wage gains for Oregon workers," the report said. "All measures that is except one. Average hourly earnings, much like its national counterpart, has been growing at just about 0% in inflation-adjusted terms."
The report cites a number of threats to the Oregon outlook, including federal fiscal policy.
"The good news for Oregon is that outside of outright land ownership, the federal government has a relatively small physical presence in the state," the report said. "This means that direct spending reductions are less likely to hurt Oregon. Of course, it also limits the local benefit from any potential increases in federal spending."
The ongoing drought affecting much of the West Coast is another risk, the outlook warned, damaging the state's agricultural businesses.
The state's general fund revenues are expected to grow by 11.8% through 2017 to $18 billion, and then climb at a slower pace of close to 9.5% through 2025.
"The slowdown in long-run revenue growth is largely due to the impact of demographic changes and changes in savings behavior," the report said. "In particular, the labor force will lose many very productive workers with a lifetime of experience over the coming years."
Oregon Gov. Kate Brown was upbeat about the forecast.
"I am encouraged that, overall, Oregon's economic outlook continues to be positive and will sustain funding commitments we've made to schools, public safety, and other important state services that support opportunities for working families," Brown said in a statement. "I appreciate the foresight and prudence on the part of my legislative colleagues in ensuring a healthy ending balance that can accommodate midstream revenue adjustments."
Another forecast report will be available in December.
