Oregon Economic Forecast Report

7/31/2019 Oregon Economic Forecast Report

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Oregon Economic and

Revenue Forecast

September 2012Volume XXXII, No. 3

Release Date: August 29, 2012

Michael Jordan John A. Kitzhaber, MD Prepared By:

Chief Operating Officer Governor Office of Economic Analysis

DAS Director Department of Administrative Services


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Department of Administrative Services

Michael JordanDAS Director

Chief Operating Officer

Office of Economic Analysis

Mark McMullen, State EconomistKanhaiya Vaidya, Senior Demographer

Damon Bell, Senior AnalystJosh Lehner, Economist

Kris Klemm, Administrative Specialist

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Foreword

This document contains the Oregon economic and revenue forecasts. The Oregon economicforecast is published to provide information to planners and policy makers in state agencies and

private organizations for use in their decision making processes. The Oregon revenue forecast ispublished to open the revenue forecasting process to public review. It is the basis for much of thebudgeting in state government.

The report is issued four times a year; in March, June, September, and December.

The economic model assumptions and results are reviewed by the Department of AdministrativeServices Economic Advisory Committee and by the Governor's Council of Economic Advisors.The Department of Administrative Services Economic Advisory Committee consists of 15economists employed by state agencies, while the Governor's Council of Economic Advisors is agroup of 12 economists from academia, finance, utilities, and industry.

Members of the Economic Advisory Committee and the Governor's Council of EconomicAdvisors provide a two-way flow of information. The Department of Administrative Servicesmakes preliminary forecasts and receives feedback on the reasonableness of such forecasts andassumptions employed. After the discussion of the preliminary forecast, the Department ofAdministrative Services makes a final forecast using the suggestions and comments made by thetwo reviewing committees.

The results from the economic model are in turn used to provide a preliminary forecast for statetax revenues. The preliminary results are reviewed by the Council of Revenue Forecast Advisors.The Council of Revenue Forecast Advisors consists of 15 specialists with backgrounds in

accounting, financial planning, and economics. Members bring specific specialties in tax issuesand represent private practices, accounting firms, corporations, government (Oregon Departmentof Revenue and Legislative Revenue Office), and the Governors Council of Economic Advisors.After discussion of the preliminary revenue forecast, the Department of Administrative Servicesmakes the final revenue forecast using the suggestions and comments made by the reviewingcommittee.

Readers who have questions or wish to submit suggestions may contact the Office of EconomicAnalysis by telephone at 503-378-3405.

Michael JordanDAS DirectorChief Operating Officer


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Table of Contents

EXECUTIVE SUMMARY .......................................................................................................... 6

I. ECONOMIC FORECAST ............................................................................................. 13

A. National Economic Review and Forecast ..................................................................... 13

B. International Review and Outlook ................................................................................ 17

C. Western Region ............................................................................................................... 23

D. Oregon Economic Review and Forecast ....................................................................... 27

II. REVENUE FORECAST ................................................................................................ 56

A. 2011-13 General Fund Revenues ................................................................................... 56

B. Extended General Fund Revenue Outlook ................................................................... 59

C. Tax Law Assumptions .................................................................................................... 59

D. Forecast Risks.................................................................................................................. 60

E. Lottery Earnings Forecast ............................................................................................. 61

F. Overview of Budgetary Reserves ................................................................................... 62

APPENDIX A: ECONOMIC FORECAST DETAIL ............................................................ 64

APPENDIX B: REVENUE FORECAST DETAIL ............................................................... 85

APPENDIX C: POPULATION FORECASTS BY AGE AND SEX .................................... 98


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EXECUTIVE SUMMARY

September 2012

Oregon Economic Forecast

Current Conditions

Oregons economic expansion is still intact for now, but remains at risk, and is losing steam dueto weakness in global demand for our products. To date, local labor markets have slowlyimproved along with the nation overall, resulting in a slowly declining unemployment rate.

Although economic growth in Oregon has continued at roughly the same slow pace since therecovery began, the forces driving this growth have recently changed. In particular, the regionalhousing market is beginning to show signs of life, which is helping to offset weaker market

conditions among many of Oregons major manufacturers and exporters.

The fact that improvement continues is encouraging. However, the threat of external shocks hasplaced a burden on businesses and households, leading many to pull back on their spending outof caution. The euro zone recession and potential crisis in addition to the slowdown in Chinaand an uncertain U.S. federal policy environment represent three very large risks to the globaloutlook. These risks are hard to handicap from a planning perspective and have created anexorbitant amount of uncertainty about the future. As a result, future plans are being delayedwith businesses and individuals holding off on making long-term investments.

Outlook

Despite all of the uncertainty, the economic outlook for Oregon remains positive. It is likely thatthe U.S. economic recovery can survive any one of these external shocks if faced in isolation.

However, even if all of the external threats facing Oregon are resolved in a painless manner, theuncertainty they have caused can be expected to weigh on growth. By taking a wait-and-seeapproach, firms and households are ensuring that some degree of a slowdown will occur. Shouldthey not see anything too drastic; the expected slowdown will remain just that, and not transitioninto something worse.

Due to a recent string of weak manufacturing, consumer spending, and trade data, a broad

consensus of economic forecasters has become more pessimistic about future growth prospects.Similarly, the Office of Economic Analysis outlook reflects somewhat weaker expectations forgrowth over the next two years. Despite the revised growth rates, the general character ofOregons lackluster economic outlook has not changed, with more of the same, slowimprovement expected going forward.

During the recovery so far, Oregons employment has grown at just under the states long runtrend rate, or approximately 1.2 percent annually. While growing at trend which includes both


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expansions and recessions is better than not, this is less than half of a typical expansion yearsgrowth. The private sector has added jobs at a 1.5 percent pace since late 2010, which again isjust about half of the past two expansions pace.

The economy has faced two major drags in recent years: housing and government. After

contracting 30 percent during the recession and losing a further 1.5 percent from early 2010 toearly 2011, housing-related jobs have begun to grow again. While the pace of hiring is slow,simply having the housing sector turn from a negative aspect of the economy to a neutral orslightly positive aspect is more than welcome news. The news is less good on the public sectorside. Government job cuts have not ended, holding down the headline employment numbersstatewide. Although the losses have not stopped, government job cuts in recent months havebeen less severe than a year ago.

The vast majority of the public sector cuts have occurred at the local government education level K-12 and community colleges and the economic outlook calls for another round of cuts thiscoming school year. Next year, expectations are for public sector employment to stabilize with

the sector gradually turning from a negative to a positive contributor to employment growth.

Growth in housing-related industries and a stabilization of government payrolls is particularlygood news for rural Oregon. Recent differences in the economic performance of counties acrossOregon are expected to lessen going forward. As the housing market continues to heal and stateand local governments stop cutting back, drags on economic growth in rural areas will lessen.Farm income remains healthy, and market conditions are stabilizing for many wood productfirms. Expectations are not for strong growth, but at least a sustained upturn in many areas thathave missed out on the recovery thus far.

All told, slow growth will continue to be the norm. The manufacturing cycle is past its peak, andOregons major trading partners are ordering fewer of our goods. Consumers will not save theday, since many still need to fix their household balance sheets by saving more or paying downdebt. Recent improvements in labor markets and housing markets will help the expansion persist,but will not be enough to generate strong growth.

Summary of Recent Trends

Getting a handle on the health of Oregons labor market is being somewhat complicated bytechnical issues within the underlying payroll jobs data. Technical issues aside, employment inOregon continues to increase at a slow, subdued pace through early 2012, approximately in linewith the gains seen at the U.S. level.

The employment data discussed in this report is adjusted for two important technical purposes:seasonality and the upcoming benchmark revisions1.After adjustments, the data reveals a statethat continues to expand slowly, adding nearly 19,000 jobs in the past year (1.2% through2012q2), instead of a state that is close to stagnating, adding only 11,500 jobs in the past year(0.7%).

1 See the full forecast report for additional detail


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Over the past year, job growth has been widespread across industries, with only transportationequipment manufacturers and financial service firms seeing small declines in the private sector.Public sector employment fell by more than 2.0 percent over the same period. The largest gainshave been in professional and business services and leisure and hospitality, which increased byapproximately 7,400 and 3,100, respectively, from 2011q2 to 2012q2. Health services and

construction each added between 2,500 and 3,000 jobs over the past year. These four mainindustry groups account for approximately 63 percent of all private sector gains, withmanufacturing accounting for another 13 percent, or 3,200 jobs. Within manufacturing, gainswere led by durable goods, particularly metals and machinery.

Similar to the employment data, leading indicators for Oregon have moved in fits and starts inrecent years. Following growth in late 2011 through early 2012, Oregons leading indicatorsdeclined sharply in June. However, the index remains positive on a six-month growth basis,which is consistent with an expanding economy in the near future. The overall index was leddownward by large movements in a handful of indicators most affected by the global economicweakness Most indicators, including measures of the health of Oregons job market, point to

continued growth.

Demographic Forecast

Oregons population count on April 1, 2010 was 3,831,074. Oregon gained 409,550 personsbetween the years 2000 and 2010. The population growth during the decade of 2000 to 2010 was12.0 percent, down from 20.4 percent growth from the previous decade. Oregons rankings interms of decennial growth rate dropped from 11 th between 1990-2000 to 18th between 2000 and2010. Slow population growth during the most recent decade due to double recessions probablycost Oregon one additional seat in the U.S. House of Representatives. Actually, Oregonsdecennial population growth rate during the most recent decade was the second lowest since1900. The slowest, actually negative, was during the 1980s when Oregon was hit hard by anotherrecession. As a result of recent economic downturn and sluggish recovery, Oregons populationis expected to continue a slow pace of growth in the near future. Based on the current forecast,Oregons population will reach 4.25 million in the year 2020 with an annual rate of growth of1.03 percent between 2010 and 2020.

Oregons economic condition heavily influences the states population growth. Its economydetermines the ability to retain local work force as well as attract job seekers from national andinternational labor market. As Oregons total fertility rate remains below the replacement leveland deaths continue to rise due to ageing population, long-term growth comes mainly from netin-migration. Working-age adults come to Oregon as long as we have favorable economic andemployment environments. During the 1980s, which included a major recession and a net loss ofpopulation, net migration contributed to 22 percent of the population change. On the otherextreme, net migration accounted for 73 percent of the population change during the boomingeconomy of 1990s. This share of migration to population change declined to 56 percent in 2002and it was further down to 32 percent in 2010. As a sign of slow to modest economic gain, theratio of net migration-to-population change will increase gradually and will reach 72 percent bythe end of the forecast horizon. Although economy and employment situation in Oregon lookstagnant at this time, migration situation is not expected to replicate the early 1980s pattern of


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children and young adults will likely to increase at a slower pace, whereas demand for elderlycare and services will increase rapidly.

Revenue Forecast

Summary

The weaker outlook for economic growth translates directly into a weaker outlook for Oregonsprimary General Fund revenue sources. Most notably, personal income tax collections areexpected to be more than 2% smaller over the extended forecast horizon than what was reflectedin the June 2012 forecast.

With fewer jobs expected, taxes related to labor income are expected to grow at a slower rate.Reductions in the outlook for taxes withheld out of workers paychecks mirror reductions in theoutlook for wage earnings. Forecasts have been reduced by much more for some volatile incometax sources including capital gains and corporate excise taxes. In addition to personal incometaxes, consumer spending on video lottery and tobacco products is also now expected to be

weaker than what was reflected in the June 2012 forecast.

Although the long-term revenue forecast has been reduced significantly, the outlook for thecurrent biennium remains on track. Over the last three months, General Fund revenue collectionshave come in somewhat stronger than expected. Also, it will take several months before theexpected weakness in economic growth becomes fully reflected in lower tax collections.

Overall, General Fund revenue growth is expected to remain slow, growing by 11% during 2011-13 and in each of the next two biennia. During past periods of economic expansion in Oregon,revenues have grown by 15% to 20% in a typical biennium.

Revenue growth in Oregon and other states will face considerable downward pressure over the10-year extended forecast horizon. As the baby boom population cohort works less and spendsless, traditional state tax instruments such as personal income taxes and general sales taxes willbecome less effective, and revenue growth will fail to match the pace seen in the past.

2011-13 General Fund Revenues

Growth in general fund revenues has not been remarkable over the summer months, but it hasbeen healthy. Personal income taxes are growing due to a mix of both labor and investmentincome, and corporate excise taxes appear to have stabilized after dropping sharply early in thebiennium.

Collections of most major revenue types came in stronger than what was expected over thesummer. Although a weaker economy is already manifesting itself in tax collections, it will takesome time before slower economic growth is fully reflected in the revenue outlook. As a result,the revenue outlook for the 2011-13 biennium is somewhat stronger than what was predicted inthe June 2012 forecast. The forecast for General Fund revenues for 2011-13 is now $13,921million. This represents an increase of $88 million (0.6%) from the June 2012 forecast.


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Table R.1

(Millions)

2011 COS

Forecast

June 2012

Forecast

September 2012

Forecast

Change from

Prior Forecast

Change from

COS Forecast

Structural RevenuesPersonal Income Tax $12,193.6 $11,919.9 $11,956.6 $36.7 -$236.9

Corporate Income Tax $894.2 $814.5 $842.6 $28.1 -$51.7

All Other Revenues $944.2 $1,098.5 $1,121.8 $23.2 $177.6

Gross GF Revenues $14,032.0 $13,832.9 $13,921.0 $88.0 -$111.0

Administrative Actions1 -$23.1 -$14.1 -$4.4 $9.7 $18.7

Legislative Actions $0.0 $0.0 $0.0 $0.0 $0.0

Net Available Resources $14,008.9 $13,818.9 $13,916.6 $97.7 -$92.3

Confidence In tervals

67% Confi dence +/- 4.0% $552.0

95% Confi dence +/- 7.9% $1,104.0

2011-13 General Fund Forecast Summary

$13.37B to $14.47B

$12.82B to $15.02B

1 Reflects cost of cashflow management actions, exc lusive of internal borrowing.

The forecast for the 2011-13 biennium is now $111 million below the Close of Session forecast.Given the strong employment gains seen in early 2011, the Close of Session forecast is moreoptimistic than other versions produced before or since. Nevertheless, given lackluster near-termexpectations for revenue growth, a strong April 2013 of tax collections would put us back ontrack with the Close of Sessions relatively optimistic outlook. If we see a boom similar to the

last revenue cycle, the personal income tax kicker may yet come into play.

Personal Income Tax

Personal income tax collections were $1,836 million for the fourth quarter of fiscal year 2012,$29.4 million (1.6%) above the latest forecast. Compared to the year-ago level, total personalincome tax collections grew by 3.7% relative to a forecast that called for 2.1% growth. Personalincome tax collections have continued to come in higher than forecast during the current quarter.Appendix B presents a comparison of actual and projected personal income tax revenues for thefourth quarter of 2012.

Personal income tax collections are expected to remain weak until the April 2013 filing season

when the gains seen in stock markets this year are realized for tax purposes. Further taxablecapital gains realizations will be generated by taxpayers attempting to move their assets ahead ofpotential federal tax increases in 2013. Very few collections related to filers who receiveextensions are expected this year, with payments expected to fall and refunds to rise.


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Corporate Excise Tax

Corporate excise tax collections equaled $172 million for the fourth quarter of fiscal year 2012,$12.4 million above the June forecast. Compared to one year ago, net corporate receipts weredown 1.6% with the forecast calling for an 8.7% decline.

Corporate tax collections are expected to continue to decline throughout fiscal year 2013, as theyremain very large from an historical perspective. Very strong growth is expected during the2013-15 biennium, since corporate tax collections are prone to boom-bust cycles. However,growth rates, while large, will remain less than half of what has been seen during recent profitbooms.

Other Sources of Revenue

All other General Fund revenues are expected to total $1,122 million for the 2011-13 biennium,an increase of $23 million (2.1%). Most revenue sources are tracking ahead of the June forecast,including large contributions from estate taxes, judicial-related revenues and liquor

apportionment. Only revenues from the sale of tobacco products and video lottery sales aretracking significantly below forecast.2

Extended General Fund Revenue Outlook

Table R.2 exhibits the long-run forecast for General Fund revenues through the 2019-21biennium. Users should note that the potential for error in the forecast increases substantially thefurther ahead we look.

2Lottery transfers into the General Fund are not included in the total. See the full forecast document for a

discussion of the lottery forecast.

Table R.2

General Fund Revenue Forecast Summary (Millions of Dollars, Current Law)

Forecast Forecast Forecast Forecast Forecast Forecast

2009-11 % 2011-13 % 2013-15 % 2015-17 % 2017-19 % 2019-21 %

Revenue Source Biennium Chg Biennium Chg Biennium Chg Biennium Chg Biennium Chg Biennium Chg

Personal Income Taxes 10,467.2 3.7% 11,956.6 14.2% 13,416.9 12.2% 15,069.0 12.3% 16,638.4 10.4% 18,405.7 10.6%

Corporate Income Taxes 827.6 20.9% 842.6 1.8% 1,070.8 27.1% 1,083.7 1.2% 1,056.6 -2.5% 1,081.7 2.4%

All Others 1,226.6 29.8% 1,121.8 -8.5% 967.2 -13.8% 1,025.8 6.1% 1,096.6 6.9% 1,184.4 8.0%

Total General Fund 12,521.4 6.8% 13,921.0 11.2% 15,454.8 11.0% 17,178.5 11.2% 18,791.6 9.4% 20,671.8 10.0%

Kicker Distributions - - - - - -

Total Revenue 12,521.4 -2.2% 13,921.0 11.2% 15,454.8 11.0% 17,178.5 11.2% 18,791.6 9.4% 20,671.8 10.0%

Other taxes include General Fund portions of the Eastern Oregon Severance Tax, Western Oregon Severance Tax and Amusement Device Tax .

Commercial F ish Licenses & Fees and Pari-mutual Receipts are included in Other Revenues


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General Fund revenues will total $15,455 million in 2013-15, an increase of 11.0% percent fromthe prior period, and $223 million (-1.4%) below the March forecast. In 2015-17, revenue growthis expected to remain stable at 11.2%, followed by slower rates of 9% to 10% in subsequentbiennia. The slowdown in long-run revenue growth is largely due to the impact of demographicchanges.

I. ECONOMIC FORECAST

September 2012

While economic growth continues in fits and starts, an underlying positive trend remains intact.The nations GDP has grown about 2 percent per year for the past three years and payrollemployment gains have averaged 150,000 per month. Certainly, these figures make for adisappointing recovery, but they do not make for a disaster.

This edition of the National Economic Review and Forecast contains excerpts from Nigel Gault,U.S. Economy: Current Situation: Forecast Flash, IHS Global Insight, July 2012. This

publication summarizes Global Insights baseline national forecast that OEA uses as a startingpoint for the Oregon economic and revenue models. OEA summarizes the Forecast Flash and isour interpretation of this document. Any errors or misrepresentations are attributable to OEA.

A. National Economic Review and Forecast

Slowdown or Something Worse?

The U.S. manufacturing sector in June and July finally felt the global slowdown as the ISMmanufacturing index dropped below the breakeven point of 50. While most manufacturingindices around the world had already slowed, the U.S. held up longer than the majority of the

advanced economies. The nonmanufacturing ISM index remained above 50 but did show signsof slowing. Central banks, such as China and the ECB, are cutting interest rates, or extendingunconventional easing, such as the Bank of England, but the potency of these actions is unclear.

Worse to Come? Do these data point to worse things to come? Or are we, once again, in atemporary soft patch in the recovery? IHS Global Insight and the general economic consensustake the latter view. The U.S. economy is still above recessionary readings and not all of thenews is bad. Both residential and nonresidential construction activity is increasing. The gasolineprice drop from April through June was a welcomed boost to consumers to the tune of about0.5% of disposable income although prices are once again rising. Overall economic andemployment growth is likely to remain modest. The macroeconomic outlook has been nudgedslightly lower and the probability of recession in the near term has risen to 25%.

Second Quarter GDP Growth Now Pegged at Just 1.5% IHS Global Insight lowered itsprojected in second quarter growth to just 1.5% ahead of the official data release, which showedthe domestic economy expanding at 1.5%. IHS Global Insight expects GDP growth to average2% in the second half of the year, led by consumer spending and housing activity.

External Shocks Remain the Biggest Risk. The baseline forecast continues to assume Greeceexits the European Monetary Union in 2013; an earlier exit would threaten turmoil as it would


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likely intensify pressure on both Italy and Spain. Even without an early Grexit, the Eurozonecrisis could worsen particularly if the economic data continues to be bad. The slowdown inChina could also intensify. And a confrontation with Iran has not disappeared from a geo-political risk, which would impact oil prices. Within the U.S. the fiscal cliff continues to cloudthe outlook but remains an entirely avoidable calamity. IHS Global Insight estimates that under

the worse case cliff scenario that the economy would contract 0.3% in 2013. Given theseverity of the cliffs consequences, it is expected that an extension of current policies remainsthe likely outcome. Meaning that the baseline forecast assumes neither the Bush tax cuts nor thepayroll tax cut expire in 2013 and the sequestration does not go ahead.

Healthcare Reform Survives for Now. The Supreme Courts ruling on the healthcare reform hasno impact of the baseline forecast. The reform may still unravel, of course, if Republicans aresufficiently powerful after the November elections. Or if many states opt out of the Medicaidexpansion.

The Fed: More Quantitative Easing Still on the Table. The Federal Reserve has again loweredits economic outlook, including inflation, and has also extended Operation Twist through the

end of 2012. Twist as you may recall is the process in which the Fed buys longer termgovernment securities and sells shorter term securities. IHS Global Insight believes the Fedcontinues to be too optimistic on growth and will likely follow up with more action once thetwist expires. The forecast assumes $500 billion worth of quantitative easing in 2013. Shouldgrowth be even weaker in 2012 of if the Eurozone crisis intensifies, this easing is likely to bebrought forward.

Figure N.1*

Quarterly Annual

1

Q 12

2

Q 12

3

Q12

4

Q12

2

011

2

012

2

013

2

014

2

015

Real GDP (%,AR)

1.9

1.5

2.0

2.0

1.7

2.0

2.0

2.7

3.3

Federal Funds

Rate

0.

10

0.

15

0.

16

0.

16

0

.10

0

.14

0

.16

0

.26

1

.81

10 Year T-Bill2.

04

1.

83

1.

69

1.

79

2

.79

1

.83

2

.22

3

.02

3

.91

Oil Prices,

Refiner Acquisition

Cost ($)

10

8

10

188 88

1

02

9

6

8

9

9

7

9

6

Consumer Price

Index (Y/Y %)

2.

8

1.

9

1.

1

1.

1

3

.1

1

.7

1

.3

2

.3

2

.0

Housing Starts

(millions)

0.

71

0.

73

0.

78

0.

83

0

.61

0

.77

0

.94

1

.22

1

.52Consumer

Sentiment (Univ. of

Michigan)

76 76 76 776

7

7

6

7

9

8

0

8

2

Unemployment

Rate (Percent)

8.

2

8.

2

8.

1

8.

0

9

.0

8

.1

8

.0

7

.7

7

.1

*Figure N.1 was taken from Nigel Gault, U.S. Economy: Current Situation: Forecast Flash, IHS Global Insight, July 2012


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Graph N.1U.S. Economic History and Forecast

-4

-3

-2

-1

0

1

2

3

4

5

1996 1999 2002 2005 2008 2011 2014 2017 2020PercentChange

Real GDP, Percent Change2005 Dollars, Chain Weighted

0

1

2

3

4

5

6

7

8

9

10

11

1996 1999 2002 2005 2008 2011 2014 2017 2020

Percent

Unemployment Rate

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1996 1999 2002 2005 2008 2011 2014 2017 2020

Real Exchange RateMajor Trading Partners Other Important Partners

0

1

2

3

4

5

6

7

8

9

10

11

1996 1999 2002 2005 2008 2011 2014 2017 2020

Percent

Interest Rates

Pr ime 3M Tr easur y 1 0 Yr Tr easur y

0.0

0.5

1.0

1.5

2.0

2.5

1996 1999 2002 2005 2008 2011 2014 2017 2020

Millions

Housing Starts

Total Single Family Multi-Family

-2

-1

0

1

2

3

4

5

6

1996 1999 2002 2005 2008 2011 2014 2017 2020

Year-Over-YearPercentCh

nage

Consumer Price IndexAll Items Excluding Food & Energy

50

60

70

80

90

100

110

-4

-2

0

2

4

6

8

1 99 6 1 99 9 2 00 2 2 00 5 20 08 20 11 2 01 4 2 01 7 2 020

PercentChnage

Consumer Confidence & SpendingReal Consumer Spending (Left Axis)

Consumer Sentiment (Univ of Mich, Right Axis)

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1996 1999 2002 2005 2008 2011 2014 2017 2020

Standard and Poor's 500 Index


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TABLE N. 1

U.S. Forecast Summary 2009-2017 (Jul 2012 U.S. Forecast, IHS Global Insight)

2011:4 2012:1 2012:2 2012:3 2012:4 2013:1 2009 2010 2011 2012 2013 2014 2015 2016 2017

GDP (Bil of 2005 $) Chain Weight 13,429 13,491 13,543 13,610 13,677 13,756 12,703 13,088 13,315 13,580 13,850 14,228 14,701 15,148 15,592

% Ch 3.0 1.9 1.5 2.0 2.0 2.3 (3.5) 3.0 1.7 2.0 2.0 2.7 3.3 3.0 2.9

Personal Income (Bil of $) 13,106 13,228 13,340 13,475 13,604 13,715 11,930 12,374 12,991 13,412 13,908 14,544 15,278 16,068 16,803

% Ch 1.5 3.8 3.4 4.1 3.9 3.3 (4.3) 3.7 5.0 3.2 3.7 4.6 5.0 5.2 4.6

Nonagricultural Employment (Millions) 132.0 132.7 133.0 133.3 133.8 134.2 130.8 129.9 131.4 133.2 134.9 136.8 139.1 141.5 143.5

% Ch 1.4 2.1 1.0 1.0 1.3 1.4 (4.4) (0.7) 1.2 1.4 1.3 1.4 1.7 1.7 1.4

Unemployment Rate 8.7 8.3 8.2 8.1 8.0 8.0 9.3 9.6 8.9 8.1 8.0 7.7 7.1 6.6 6.2

Point Change (15.2) (18.5) (4.8) (2.5) (4.1) (2.6) 59.9 3.8 (7.0) (9.0) (2.4) (3.5) (8.0) (7.1) (5.7)

Industrial Production Index (2007=100) 95.3 96.6 97.4 97.7 98.3 98.9 85.4 90.1 93.7 97.5 99.7 102.9 106.8 109.8 112.9

% Ch 5.1 5.6 3.1 1.2 2.3 2.6 (11.4) 5.4 4.1 4.0 2.2 3.2 3.8 2.8 2.9

Corporate Profits (Bil of $) 1,905 2,139 2,059 2,078 2,114 2,363 1,456 1,819 1,896 2,098 2,353 2,326 2,270 2,215 2,168

% Ch (1.7) 59.1 (14.1) 3.7 7.2 56.0 7.0 25.0 4.2 10.6 12.2 (1.1) (2.4) (2.4) (2.1)

Money Supply (M2) (Bil of $) 9,571 9,771 9,877 9,971 10,061 10,159 8,450 8,728 9,571 10,061 10,412 10,911 11,368 11,752 12,147

% Ch 7.5 8.6 4.4 3.9 3.6 4.0 5.3 3.3 9.7 5.1 3.5 4.8 4.2 3.4 3.4

Prime Rate 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.32 4.81 6.67 7.00

% Ch 0.0 0.0 0.0 0.0 0.0 0.0 (36.1) 0.0 0.0 0.0 0.0 2.2 44.9 38.6 5.0

Consumer Price Index (1982-84=100) 227.0 228.3 228.8 228.6 229.3 230.2 214.6 218.1 224.9 228.8 231.7 237.1 241.8 246.1 250.1

% Ch 1.3 2.5 0.7 (0.2) 1.2 1.4 (0.3) 1.6 3.1 1.7 1.3 2.3 2.0 1.8 1.6

Federal Budget (unified) (Bil of $, Fed FY (321.7) (457.2) (103.2) (251.8) (281.2) (330.2) (1,471.3) (1,275.1) (1,249.6) (1,093.4) (743.6) (632.2) (570.9) (574.5) (562.5)

Current Account Balance (Bil of $) (474.6) (549.3) (534.3) (487.4) (459.1) (436.1) (381.9) (442.0) (465.9) (507.5) (460.4) (517.3) (544.2) (580.1) (570.0)% Ch 44.85 79.34 (10.47) (30.74) (21.27) (18.59) (43.6) 15.7 5.4 8.9 (9.3) 12.4 5.2 6.6 (1.7)

Population (Millions) 313.41 314.17 314.93 315.69 316.46 317.22 307.58 310.06 312.38 315.31 318.38 321.48 324.59 327.73 330.89

% Ch 1.0 1.0 1.0 1.0 1.0 1.0 0.9 0.8 0.7 0.9 1.0 1.0 1.0 1.0 1.0

AnnualQuarterly

TABLE N. 2

U.S. Forecast Change - (Current Forecast Jul 2012 vs. Last Forecast Apr 2012)

2011:4 2012:1 2012:2 2012:3 2012:4 2013:1 2009 2010 2011 2012 2013 2014 2015 2016 2017

GDP (Bil of 2005 $) Chain Weight 13,429 13,491 13,543 13,610 13,677 13,756 12,703 13,088 13,315 13,580 13,850 14,228 14,701 15,148 15,592

% Change From Last Forecast 0.0 (0.0) (0.2) (0.2) (0.3) (0.2) 0.0 0.0 0.0 (0.2) (0.6) (1.3) (1.2) (0.9) (0.6)

Personal Income (Bil of $) 13,106 13,228 13,340 13,475 13,604 13,715 11,930 12,374 12,991 13,412 13,908 14,544 15,278 16,068 16,803

% Change From Last Forecast (0.4) (0.2) (0.4) (0.7) (0.8) (0.9) 0.0 0.0 (0.1) (0.5) (1.0) (1.4) (1.2) (1.0) (0.8)

Nonagricultural Employment (Millions) 132.0 132.7 133.0 133.3 133.8 134.2 130.8 129.9 131.4 133.2 134.9 136.8 139.1 141.5 143.5

% Change From Last Forecast 0.0 (0.0) (0.1) (0.3) (0.4) (0.5) 0.0 0.0 0.0 (0.2) (0.6) (1.0) (1.0) (0.8) (0.5)

Unemployment Rate 8.7 8.3 8.2 8.1 8.0 8.0 9.3 9.6 8.9 8.1 8.0 7.7 7.1 6.6 6.2

Point Change From Last Forecas t 0.0 (0.0) (0.1) (0.1) (0.0) (0.0) 0.0 0.0 0.0 (0.0) 0.1 0.4 0.5 0.4 0.2

Industrial Production Index (2007=100) 95.3 96.6 97.4 97.7 98.3 98.9 85.4 90.1 93.7 97.5 99.7 102.9 106.8 109.8 112.9

% Change From Last Forecast 0.2 0.3 (0.4) (1.0) (1.0) (1.0) 0.0 0.0 0.0 (0.5) (1.3) (1.6) (0.9) (0.8) (0.3)

Corporate Profits (Bil of $) 1,905 2,139 2,059 2,078 2,114 2,363 1,456 1,819 1,896 2,098 2,353 2,326 2,270 2,215 2,168

% Change From Last Forecast 0.0 5.9 3.9 5.8 7.6 10.7 0.0 0.0 0.0 5.8 9.4 2.9 3.6 4.3 5.1

Money Supply (M2) (Bil of $) 9,571 9,771 9,877 9,971 10,061 10,159 8,450 8,728 9,571 10,061 10,412 10,911 11,368 11,752 12,147

% Change From Last Forecast (0.3) (0.1) 0.2 0.1 0.0 0.0 (0.5) (0.4) (0.3) 0.0 (0.8) (1.2) (1.3) (1.2) (0.9)

Prime Rate 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.32 4.81 6.67 7.00

% Change From Last Forecast 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.2 13.6 6.4 (0.0)

Consumer Price Index (1982-84=100) 227.0 228.3 228.8 228.6 229.3 230.2 214.6 218.1 224.9 228.8 231.7 237.1 241.8 246.1 250.1

% Change From Last Forecast 0.0 0.0 (0.3) (0.8) (0.9) (1.0) 0.0 0.0 0.0 (0.5) (0.9) (0.4) (0.3) (0.5) (0.5)

Federal Budget (unified) (Bil of $, Fed F (321.7) (457.2) (103.2) (251.8) (281.2) (330.2) (1,471.3) (1,275.1) (1,249.6) (1,093.4) (743.6) (632.2) (570.9) (574.5) (562.5)

Current Account Balance (Bil of $) (474.6) (549.3) (534.3) (487.4) (459.1) (436.1) (381.9) (442.0) (465.9) (507.5) (460.4) (517.3) (544.2) (580.1) (570.0)

% Cha nge From La st Forec ast (4.39) 0.30 (6.97) (13.91) (16.03) (15.56) 1.4 (6.1) (1.6) (9.2) (10.0) 3.3 2.4 2.4 2.5

Population (Millions) 313.41 314.17 314.93 315.69 316.46 317.22 307.58 310.06 312.38 315.31 318.38 321.48 324.59 327.73 330.89

% Change From Last Forecast (0.4) (0.4) (0.4) (0.4) (0.4) (0.4) (0.1) (0.1) (0.3) (0.4) (0.4) (0.4) (0.4) (0.4) (0.3)

AnnualQuarterly


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B. International Review and Outlook

This edition of the International Review and Outlook contains information written by Payton Odom,Research Analyst, and Valerie Grossman, Research Assistant, with the Federal Reserve Bank ofDallas. The following section was originally published as the International Economic Update, datedAugust 3, 20123, and is reprinted here in accordance with the Banks disclaimer and privacy policy.

Near-term forecasts for global gross domestic product (GDP) growth have been revised downwardin most advanced and emerging economies, with uncertainty surrounding the euro area continuingto restrain growth prospects.

With Spains and Italys financial stability in question and Chinas second-quarter growth rateslower than expected, central banks in advanced and emerging economies have lowered benchmarkpolicy rates to stimulate flagging midyear output and employment growth numbers. While theUnited States is experiencing a positive, albeit moderate, recovery from the global financial crisis,the threat of sovereign debt contagion in the euro area is tempering growth and feeding uncertainty.

Financial imbalances, structural impediments to growth and policy uncertainty continue tocontribute to a negative outlook for the euro area. The 17 euro-area states have widely varyingfinancial situations. An examination of balances in the regions TARGET cross-border central bankpayment system provides evidence that periphery economies such as Spain and Italy are relying onthe European Central Bank and core members such as Germany for bank liquidity. This reliance hascreated large payment deficits between debtor and creditor countries, exacerbating political tensionsand revealing the need for structural reform.

Core countries have not escaped the threat of sovereign debt contagion, however: Moodys haslowered its outlook for Germany from stable to negative amid concerns that Greece may leave theeuro area and that Germany may be charged with the responsibility of providing more funds to theeuro-area periphery.

After reaching a yield of 7.18 percent on June 18, rates for Spains 10-year government bondhovered slightly below the 7 percent mark for much of June and July, rose to a record high of 7.63percent on July 24 and then fell back under 7 percent. Italy has also experienced rising borrowingcosts. The rise in yields has drawn attention to these two countries financial situations. Europeanfinance ministers agreed to a bailout for the Spanish government of up to 100 billion, but severalregional governments, unable to pay civil-service wages or service debt payments, are now askingfor assistance from Madrid as well. The size of Spains and Italys debt markets in comparison tothose in Greece and Portugal suggests a higher capacity to absorb increased debt servicing costs andavoid default.

Adding to the global uncertainty stemming from the euro area are recent allegations that major

investment banks manipulated the benchmark London Interbank Offered Rate (LIBOR) tomisrepresent their risk portfolios. LIBOR is the most commonly used benchmark for short-terminterest rates, serving as the base rate for $800 trillion in mortgages, loans and investments. Doubtsconcerning the accuracy of benchmark rates could serve as an additional drag on investorconfidence in the region.

3http://www.dallasfed.org/institute/update/2012/int1205.cfm
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Monetary Policy Eases with Global Inflation Pressures

With inflationary pressures mostly low across advanced and emerging economies, monetaryauthorities in many countries are responding to the recent growth slowdown by lowering benchmarkpolicy rates. The Bank of England, which already has a record low rate of 0.5 percent, has littleroom to enact rate changes. The bank left its rate unchanged and instead pledged a round ofquantitative easing on July 5, adding 50 billion to an asset-purchase program that now totals 375

billion. The European Central Bank followed suit, lowering its main lending rate 25 basis points to0.75 percent and its deposit rate to zero.

Emerging economies also tried to stave off spillover effects from the euro-area crisis by easingmonetary policy. On July 5, China unexpectedly lowered its lending rate 31 basis points to 6percent and its deposit rate 25 basis points to 3 percent following a rate cut in June. Brazil cut itspolicy rate to a record low of 8 percent on July 11; South Africa unexpectedly lowered its policyrate 50 basis points to a record low of 5 percent on July 19.

Major Emerging Economies Still Feel Chill from Euro Area

A closer examination of the impetus for Chinas policy rate cuts reveals that the pace of economicgrowth in China is slowing. Chinas manufacturing purchasing managers index, though up to 49.5from 48.2 in June, still lies in contractionary territory. Moreover, in the second quarter, Chinasyear-over-year GDP growth rate dropped to 7.6 percent, a pace last seen in 2009. The InternationalMonetary Fund (IMF) forecasts real GDP growth rates slightly above 8 percent for China through2017.

With declining inflationary pressures accompanying softer GDP growth, investors remain uncertainas to whether Chinas slowdown is indicative of a soft landing or a more pronounced trend. Chinaisnt the only emerging-market economy experiencing slowing growth. While emerging economiesare seeing stronger growth than advanced economies, economic activity has decelerated, and theIMF revised its 2012 and 2013 growth forecasts downward for the BRIC economies (Brazil, Russia,

India and China) in July.

Global Problem Depends on European Solution

The wide-reaching effects of the euro-area crisis are evident through trade and financial linkagesacross the globe, and GDP growth forecasts have been lowered in response to continued uncertaintyin the region. Resolution of the regions most pressing problems is riding on credible fiscal andstructural reform commitments in the euro area, and a renewed pace of growth appears unlikelywithout momentum from cooperative commitments between the areas member governments. In thesecond half of the year, both advanced and emerging economies are expected to see continuedmodest growth, accompanied by low and stable inflationary pressures.

- Payton Odom and Valerie Grossman


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Oregon Exports

Overview

As discussed in the Federal Reserve Bank of Dallas report, global growth has slowed particularlymanufacturing activity. One result is a slowdown in international trade, including Oregons exports.Overall, Oregon exports through the first half of 2012 are down 5.1 percent relative to their 2011

levels. As seen in Graph I.1, exports to some regions have held up. However, exports to Oregonslargest trading partners are flat or declining.

Given the states geographic location, it is no surprise that Oregon trades largely with fellow PacificRim countries. For Asia, the manufacturing slowdown is clearly seen in Oregons export data.Exports to China and Malaysia accounted for nearly 30 percent of all exports in 2011 and arecurrently down over 28 percent so far through the first half of 2012. Exports to Japan and SouthKorea represent 15 percent of the states total and are, effectively, flat on the year. All other Asianexports another 15 percent of all exports have increased 6 percent in the past year due toincreased shipments of Computer and Electronic Products to Vietnam. All Asian economiescombined, representing 59 percent of Oregon export markets, have seen trade fall nearly 14 percentso far in 2012.

Oregon exports to the rest of North America accounted for 19 percent of all exports in 2011, withCanada representing over 70 percent of this segment. These exports continue to grow strongly so farin 2012 to all three major North American destinations: Canada (+11%), Costa Rica (+57%) andMexico (+70%). Many of these regional exports are related to farm and mining equipment.However, even if commodity prices come down, trade in the Americas should continue to increasedue to the relative strength of both the Canadian and Mexican economies.

Where Oregon export trends are most interesting is regarding trade with Europe. The euro zone hasfallen back into recession and the euro is weakening relative to the dollar and many othercurrencies. Given the economic weakness in the monetary union, demand is falling. A depreciatingcurrency makes Oregons exports more expensive for Europeans, thus a decline in exports to the

Graph I.1

-30%

-20%

-10%

0%

10%

20%

30%

40%

Total China &

Malaysia

Japan & S.

Korea

Other Asia North

America

Eurozone Other Europe All Other

Oregon Export Growth, Top 50 Countries

2010 2011 2012 June YTD


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20

region is not surprising. Conversely, Eurpoean countries not in the euro zone have seen theircurrencies strengthen, and Oregons exports become more affordable. Generally, these economiesare doing better than their euro zone neighbors, and demand is increasing. However, the largestgains in this category are exports to the United Kingdom. Given that the U.K. economy, while notofficially falling back into recession, is weaker than the U.S. economy, this significant increase maybe a blip related to the recent Olympics. Overall, Oregon exports to Europe represent approximately11 percent of all exports in 2011 with the euro zone comprising two-thirds of this total.

Finally, exports to the rest of the world continue to increase, however represent a small portion ofOregons total trade flows. Recent increases in exports to Australia represent the largest increase inthis category, primarily due to gains in motor vehicle shipments. The remainder of the increasesrelate to gains in exports to both the Middle East (Isreal, Saudi Arabia, Turkey, U.A.E.) and SouthAmerica (Argentian, Brazil, Chile, Columbia, Ecuador, Peru).

Export Trends

Graph I.2 illustrates Oregonstotal exports and the growth rate

from 1997 through 2012q2.After robust growth in 2009 andinto early 2010, Oregons exportgains have certainly slowed. In2011, Oregons export growth of3.5 percent ranked 4th slowestamong all states. While it is truethat Oregon typicallyexperiences more volatilemovements than the US overall during booms exports increasemore than the nation and duringrecessions they decrease morethan the nation the currentexpansion is somewhat different given the nature of Oregons exports. As seen in Graph I.3 thereare essentially three trends going on in the detailed data that are masked by the total export figures.

High dollar value computer andelectronic product exportstypically compose around 40-45percent of the states total valueof exports, and thus, movementswithin the high tech sector swing

the statewide totals. In the firstyear and a half of the exportrecovery, exports of computerand electronic productsincreased over 70 percent fromtheir recessionary lows, drivingthe states overall export growth.Since then, these exports havefallen from historic highs reach

Graph I.2

-45%

-30%

-15%

0%

15%

30%

45%

0

1,000

2,000

3,000

4,000

5,000

6,000

Q1 1997 Q1 1999 Q1 2001 Q1 2003 Q1 2005 Q1 2007 Q1 2009 Q1 2011

$millions

Oregon Total ExportsTo tal Ex po rts (L eft A xis) Ye ar -o ve r-Ye ar Chan ge (Righ t A xis)

Graph I.3

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Q1 2009 Q1 2010 Q1 2011 Q1 2012

Export Growth in Recovery

Computer And Electronic Products Agricultural Products All Other


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in 2010; however the past recent quarter saw another large gain and the industry is currentlyexporting 40 percent more than during the depths of the recession.

The second underlying trend has been the overall strength in agricultural exports, even though theyremain very volatile due to commodity prices. Agricultural exports, chiefly grains, have remainedrelatively steady in terms of the volume of exports, which is important from an economic impactsense as the number of containers or barges loaded impacts the number of longshoremen or truck

drivers or warehouse space needed, rather than just the dollar value of exports. Even though thequantity of exports has remained comparatively stable, the dollar value has not due to the largecommodity price swings experienced in recent years as can be seen in both Graph I.3 above and I.4below.

The third main trend in Oregon exports has to do with all other industries. While these productsmay not have driven export growth initially, they are now the states strongest due to their slow andsteady growth in the past three years. Currently, exports from all industries outside of agricultureand computer and electronic products are over 70 percent above their recessionary lows and thegains are broad based across industries. Both Chemicals and Machinery have each contributed 16percentage points to Oregons overall export growth, while Wood Products and Paper Products

have contributed a further 9 percent. These four industries growth outpaces the combined growthof Agriculture and Computer and Electronic Products (33 percent). Over the past three years, onlythree industries (out of 32) have registered losses over the period and none have seen declines largerthan 0.7 percent.

All told, Oregon exports haverebounded strongly fromrecessionary lows in recent years,and have reached a plateau at ahigh level the past two years.Expectations are for continuedgrowth across all industries in thenear future as global demandpicks up following the recentslowdown.

Table I.1 shows Oregons dollarvalue of exports and year-over-year growth rates for the first halfof 2012. Graph I.4 illustratesexports by major industry since1997. For Table I.1, these are thetop fifteen industries by export

volume (in value). annual growthis positive for nine of the top fifteen export industries. As mentioned above, computer andelectronic products have decreased over the past two years. Exports to the top three partnercountries in the industry (China, Costa Rica and Malaysia) account for almost two-thirds ofshipments, and fell sharply in 2011. So far in 2012 exports to China and Malaysia continue todecline, while Costa Rica has seen gains. Overall, this industry is Oregons largest and mostimportant export sector, driven by the states cluster of high technology firms.

Table I.1Oregon Exports by Industry

($ millions, current prices)

2011q2

YTD

2012q2

YTD

y/y %

chan e

Share out

of Total

Total All Industries 9,515.6 9,034.6 -5.1% 100.0%

Computer And Electronic Products 3,472.1 3,102.6 -10.6% 34.3%

Agricultural Products 1,507.2 1,187.0 -21.2% 13.1%Machinery, Except Electrical 827.3 949.3 14.8% 10.5%

Chemicals 974.7 855.0 -12.3% 9.5%

Transportation Equipment 424.7 562.1 32.3% 6.2%

Waste And Scrap 280.3 315.3 12.5% 3.5%

Food And Kindred Products 258.2 298.7 15.7% 3.3%

Primary Metal Manufacturing 313.2 281.5 -10.1% 3.1%

Wood Products 266.9 256.8 -3.8% 2.8%

Paper 235.3 244.0 3.7% 2.7%

Electrical Equipment, Appliances, And Component 142.6 176.3 23.6% 2.0%

Miscellaneous Manufactured Commodities 148.9 153.5 3.1% 1.7%

Fabricated Metal Products, Nesoi 147.6 135.6 -8.1% 1.5%

Plastics And Rubber Products 91.7 104.2 13.7% 1.2%

Petroleum And Coal Products 75.3 91.7 21.8% 1.0%

Source: WISER, August 2012


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Exports of Transportation Equipment,Electrical Equipment and Petroleumand Coal all increased over 20 percentin the first half of 2012, whileMachinery, Waste and Scrap, Food

and Plastics have seen double digitgains.

Table I.2 charts exports of Oregonproducts to major destinations. For thefirst six months of 2012, only sevenout of the top fifteen export marketssaw increases in trade. As discussedpreviously, exports to China andMalaysia have declined considerablyin recent years partially a result of

within firm movements but also due tothe global high technology industrycycle and weaker demand forcomputer products. Exports to manyother countries have experienced aslowdown. However, export gains toCanada continue more or lessunabated, as seen in Graph I.5.

Canada was Oregons largest exportmarket for much of the past twodecades before being overtaken inrecent years by China. The GreatRecession took a heavy toll onCanadian bound exports as thedominant industries have traditionallybeen transportation equipment andwood products--two industries hitespecially hard by the financial crisisand its aftermath. Growth in 2011 waspredominately driven by increases inTransportation Equipment andComputer and Electronic Products,while Primary Metal Manufacturing,Chemicals, Food and Paper also sawstrong gains. So far in 2012, the gainsare driven by manufactured machineryprimarily used for agriculture,construction or mining and oil and gas.

Table I.2Oregon Exports to Major Trading Partners

($ millions, current prices)

2011q2

YTD

2012q2

YTD

y/y %

change

Share out

of Total

Total All Countries 9,515.6 9,034.6 -5.1% 100.0%

Canada 1,328.7 1,480.9 11.5% 16.4%

China 1,641.7 1,171.2 -28.7% 13.0%

Malaysia 1,269.6 910.9 -28.3% 10.1%

Japan 899.8 792.6 -11.9% 8.8%

Korea, Republic Of 538.8 620.8 15.2% 6.9%

Costa Rica 241.6 380.5 57.5% 4.2%

Taiwan 422.9 368.1 -13.0% 4.1%

Brazil 329.6 298.9 -9.3% 3.3%

Vietnam 111.7 254.8 128.2% 2.8%

Germany 273.4 251.3 -8.1% 2.8%

Australia 153.2 230.3 50.3% 2.5%Mexico 124.1 210.7 69.8% 2.3%

United Kingdom 134.7 192.8 43.2% 2.1%

Singapore 194.0 181.2 -6.6% 2.0%

Philippines 190.9 171.4 -10.2% 1.9%

Source: WISER, August 201 2

Graph I.4

$0

$400

$800

$1,200

$1,600

$2,000

$2,400

Q 1 1997 Q 1 1999 Q 1 2001 Q 1 2003 Q 1 2005 Q 1 2007 Q 1 2009 Q 1 2011

Oregon Exports by Major Industry ($ millions)Computer And Electronic ProductsAgricultural ProductsMachinery, Except ElectricalChemicalsTransportation Equipment

Graph I.5

$0

$200

$400

$600

$800

$1,000

$1,200

Q 1 1997 Q 1 1999 Q 1 2001 Q 1 2003 Q 1 2005 Q 1 2007 Q 1 2009 Q 1 2011

Oregon Exports by Country ($ millions)Canada China Malaysia Japan Korea, Republic Of


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C. Western Region

This section of the September 2012 forecast examines the economies of seven western states andtheir relative performance to the U.S. overall. Gauging the health of local economies is importantfor business planning purposes and looking at a wide range of data points can be useful. Below, youwill find tables analyzing how Oregons economy is fairing compared to the following westernstates: Arizona, California, Idaho, Nevada, Utah and Washington.

A little over three years removed from the depths of the 2008 recession, the regional economy ispushing forward cautiously. Below are data tables, graphs, and accompanying descriptions coveringsix important state-level economic indicators: employment, state coincident indexes (which are amore complete measure of labor market health), state leading indexes, housing prices, exports, andtax revenue.

Employment

The recession raised theunemployment rate inall western states to 30-year highs, and thesubsequent labor marketrecovery has beenlackluster. Currently, at8.5 percent in June,Oregon has the 3

rd

highest seasonallyadjusted unemploymentrate of the sevenWestern states (U.S.rate is 8.2%). Given themobile nature of itslabor force and the localmix of industries,Oregon tends to have ahigher unemploymentrate than most states inboth good times and bad. See Graph W.1.

Nearly all employment sectors showed positive growth on the year (Q2 2011 to Q2 2012), with theexception of the public sector which declined in all western states except Arizona and Utah. Whilethe public sector remains a drag in most states, the recent trends are for smaller public sector cuts--a

hopeful sign that budgets are beginning to stabilize across the region.

Coincident Index

One useful local economic summary measure is the State Coincident Index, produced by theFederal Reserve Bank of Philadelphia. Each month the bank compiles and indexes data for eachstate that combines nonfarm payroll employment, average hours worked in manufacturing, theunemployment rate, and real wage and salary disbursements. As a coincident index, the data isdesigned to report current economic conditions on a monthly basis, and is not a leading or a laggingindicator.

Graph W.1

2

4

6

8

10

12

14

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

Unemployment Rate (U-6)

ArizonaCaliforniaIdahoNevadaOregonUtahWashingtonU.S.


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The economic activity go-light is afaint green for Oregon and itsneighbors, while the country overallhas experienced slowing growth (seeFigure W.1). Much like the past twoyears, economic growth in 2012 iscoming in fits and starts. A few

strong months followed by a fewweak months, even if the underlyingtrend is slow and steady. Over thepast quarter, 47 states sawincreasing indexes. However, themore recent one-month trends areweak. In June, 35 states saw positivemonth-over-month growth while inJuly, only 22 saw positive growth.On a quarterly basis, Oregonsgrowth ranked 10

thbest nationally,

and outpaced all other westernstates. On a year-over-year basis,Oregons growth ranked 11

thbest

nationally, and trailed both Utah andWashington among western states.Examining the monthly data revealsOregons coincident index improvedstrongly in late 2011 and early 2012,and has slowed somewhat in themonths since. Current growth in the index is being driven by gains in statewide employment andwage growth as both hours worked among manufacturing employees and the unemployment rate

have leveled off in recent months.

Leading Indexes

The leading index is also compiledmonthly by the Federal Reserve Bankof Philadelphia and is designed topredict the six-month growth rate ofeach states coincident index. Inaddition to the coincident index, theleading index includes state-level

housing permits, initialunemployment insurance claims,delivery times from the Institute ofSupply Managements manufacturingsurvey, and the interest rate spreadbetween the 10-year and 3-monthtreasuries.

In June, 33 states leading indexeswere positive, indicating future

Table W.3

Index

Value

Q/Q Percent

Change (AR)

Y/Y Percent

Change

Percent Change

Since Peak

Arizona 169.92 10.2% 2.5% -46.3%

California 152.28 4.0% -1.3% -43.7%

Idaho 186.32 5.4% 2.6% -28.3%

Nevada 111.36 8.1% -6.9% -57.9%

Oregon 247.28 -1.1% -0.2% -26.7%

Utah 245.27 12.9% 3.0% -20.9%

Washington 204.55 -0.4% -5.4% -26.1%

United States 181.03 2.2% 0.5% -19.4%

Housing Price Index (2012 Q1)

Source: Federal Housing Finance Agency (FHFA)

Figure W.1

Table W.2

Index Value

Q/Q Percent

Change (AR)

Y/Y Percent

Change

5 Year Percent

ChangeArizona 178.79 2.6% 2.5% -11.7%

California 152.51 3.2% 3.1% -0.7%

Idaho 192.77 2.7% 3.2% -12.9%

Nevada 178.59 0.3% 0.2% -22.5%

Oregon 201.58 3.3% 3.2% -2.3%

Utah 189.63 2.7% 3.3% 0.4%

Washington 152.96 2.8% 3.6% -3.7%

United States 150.44 2.6% 2.7% 1.6%

Economic Coincident Index for 2012 Q2

Source: Federal Reserve Bank of Philadelphia, Index = 100 in Jul y 1992

Figure W.2


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growth over the coming six months. In March, 48 states had positive indices. Oregons leadingindex was negative in June, which is consistent with -0.06 percent growth over the next six months,compared to the nations projected growth of 1.0 percent. Oregons projected slowdown is primarilydriven by a decrease in housing permits issued in June. However this is not a grave concern giventhat the sustained, underlying trend in permits is positive. May happened to be an exceptionallylarge month for permits in Oregon, and when Junes figures fell back to trend, the state registered alarge negative over the month. Initial claims for unemployment insurance in Oregon continue to

decline. Across the region, California (1.6 percent), Utah (1.8 percent) and Washington (1.8percent) are expected to grow faster than the nation, while Arizona (1.0 percent) and Idaho (0.8percent) are projected to grow slightly slower.

Housing Price Index

One of the 2008 recessions salient features was a brutal decline in home prices and newconstruction activity. The property market crash has weighed heavily on housing-relatedemployment, and has also caused large drops in consumer wealth (restraining household spending),and reduced the collateral available for entrepreneurship. Multiple levels of government stepped into prop up housing prices (re-zoning, encouraging immigration, house owner assistance, etc.), but

not until recently have the western states real-estate markets begun to reverse their declining trend.Table W.3 shows theFederal Housing FinanceAgencys home price indexfor each western state.Graph W.2 shows theFHFA Housing Price Indexfor each of the westernstates since 2000.

Western states can bedivided into two groups(see table W.3 above). Onegroup (Arizona, Nevada,and California) experienceda very steep and deephousing market decline.The other four westernstates experienced a smallerbubble than did the former group, with house prices falling more gradually and less overall. Oregonexperienced a slight decline in average house prices during the first quarter. However, prices in thestate have remained relatively steady the past year.

Exports

The global recession caused a sharp decline in internationaltrade throughout late 2008 and early 2009. However, exportshave since rebounded strongly for all western states. Allwestern states except Idaho and Oregon have seen exportgrowth through the first half of the year. Idahos figures are aresult of a slowdown in Computer and Electronic Products andalso a nearly 85 percent drop in Metal Ores. Conversely,

Table W.4

Exports ($ mill)

Y/Y Percent

Change

Arizona $9,204 2.4%

California $81,965 6.0%

Idaho $2,751 -9.6%

Nevada $4,977 39.2%

Oregon $9,035 -5.1%

Utah $9,708 14.0%

Washington $35,102 16.0%

United States $773,351 7.0%

Source: WiserTrade, August 2012

Total Exports (2012q2 YTD)

Graph W.2

80

100

120

140

160

180

200

220

240

2000Q1 2002Q1 2004Q1 2006Q1 2008Q1 2010Q1 2012Q1

FHFA Home Price Index (Purchase Only)Arizona Idaho Oregon Washington

California Nevada Utah U.S.


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Nevadas exceptional growth is due to gains in nonferrous metal production and processing,excluding aluminum, the bulk of which goes to Switzerland. Overall, exports from Arizona, Idahoand Oregon have yet to reach their pre-recession peak levels, although they are close. All otherwestern states and the nation have surpassed their pre-recession levels.

Tax Revenue

After being hit hard by the Great Recession, state and local tax revenues rebounded substantially in2010 and 2011. However, early 2012 data is mixed across states (see Table W.5). Generallyspeaking, personal income tax states have reached their pre-recession levels in terms of revenuewhile most sales tax states have not quite recovered completely. Utah continued to see strongrevenue gains in 2012q1 due to increases in motor vehicles, personal income taxes and corporateincome taxes. Washingtons growth over the year is largely driven by general sales and grossreceipts taxes. All other western states experienced drops in revenue relative to 2011q1. However,for the states that levy personal income taxes, like Arizona, California, Idaho, Oregon and Utah, thesecond quarter is more important given the tax filing season.

Table W.5

Arizona Cal ifornia Idaho Nevada Oregon Utah Washington

Total Taxes 2,458,513 27,077,864 737,304 1,494,357 1,703,406 1,322,104 4,543,036

Y/Y Percent Change -2.6% -0.2% -1.1% -5.3% -2.6% 10.0% 3.7%

Property tax 189,576 494,035 X 49,111 -3,260 X 815,069

Y/Y Percent Change -2.1% -32.3% X -43.0% -161.3% X 1.3%

General sales and gross receipts 1,199,499 7,892,105 294,855 675,274 X 475,582 2,609,751

Y/Y Percent Change -17.2% -4.2% -3.8% -2.1% X 1.3% 5.2%

Motor fuel sales taxes 192,284 1,363,206 58,442 68,907 113,385 83,136 279,419

Y/Y Percent Change -3.4% -1.0% 6.7% -1.2% 4.9% -4.7% -1.4%

Alcoholic beverages 12,291 82,607 1,813 10,505 3,925 19,091 84,998

Y/Y Percent Change -33.2% 7.9% 4.0% 1.8% 9.6% 70.5% 4.2%

Public utilities 4,934 215,147 677 3,618 7,470 5,023 132,079

Y/Y Percent Change -7.8% 35.5% 21.8% -21.2% 62.3% -1.7% 12.2%

Insurance 111,105 107,141 9,499 58,479 20,943 27,189 54,303

Y/Y Percent Change 1.5% -15.1% 5.7% 3.1% 23.7% 28.7% 15.4%

Tobacco products 72,929 240,333 10,957 23,813 60,167 28,493 106,146Y/Y Percent Change -7.4% -7.0% -1.4% -9.8% 0.8% 8.5% -3.7%

Amusements 133 X X 11,025 29 X 0

Y/Y Percent Change -95.6% X X 3.2% 70.6% X NA

Motor vehicles 43,718 772,653 36,826 41,989 144,109 84,206 117,970

Y/Y Percent Change -0.7% -0.6% -3.4% 4.1% 2.0% 72.9% -0.5%

Corporations in general 2,848 13,024 540 17,827 0 151 8,464

Y/Y Percent Change 20.5% -1.5% 1.7% -4.9% -100.0% -93.0% 11.5%

Occupation and business licenses 30,180 1,055,109 21,955 162,056 75,487 11,761 60,479

Y/Y Percent Change 6.7% 3.8% 9.2% -7.2% -43.2% -2.7% 2.9%

Individual income taxes 424,087 11,978,459 220,908 X 1,134,237 491,125 X

Y/Y Percent Change 64.7% -0.6% -2.3% X -1.6% 9.4% X

Corporation net income taxes 111,363 1,624,161 30,322 X 64,335 46,560 X

Y/Y Percent Change 33.3% -21.3% -18.2% X -12.0% 70.2% X

State and Local Tax Revenue (2012 Q1)

Source: U.S. Census Bureau ($ 000s)


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have not ended, holding down the headline employment numbers statewide. Although the losseshave not stopped, government job cuts in recent months have been less severe than a year ago.

The vast majority of the public sector cuts have occurred at the local government education level K-12 and community colleges and the economic outlook calls for another round of cuts thiscoming school year. Next year, expectations are for public sector employment to stabilize with thesector gradually turning from a negative to a positive contributor to employment growth. For more

information on Oregons housing market or public sector employment trends, please visit outoffices blog4.

Summary of Recent Trends

Oregons Employment Trends

Getting a handle on the health of Oregons labor market is being somewhat complicated bytechnical issues within the underlying payroll jobs data. Technical issues aside, employment inOregon continues to increase at a slow, subdued pace through early 2012, approximately in linewith the gains seen at the U.S. level.

The employment data discussed in this report is adjusted for two important technical purposes:seasonality and the upcoming benchmark revisions

5. Given the relative strength of employment as

measured by data collected through the unemployment insurance program, it is clear thatpreliminary payroll job counts will be revised upward significantly when benchmark adjustmentsare made next year. Such preliminary revisions to the payroll survey data are regularly published insome states, and are currently a topic of discussion at the Oregon Employment Department.

After adjustments, the data reveals a state that continues to expand slowly, adding nearly 19,000jobs in the past year (1.2% through 2012q2), instead of a state that is close to stagnating, addingonly 11,500 jobs in the past year (0.7%).

Over the past year, job growth has been widespread across industries, with only transportationequipment manufacturers and financial service firms seeing small declines in the private sector.Public sector employment fell by more than 2.0 percent over the same period. The largest gainshave been in professional and business services and leisure and hospitality, which increased byapproximately 7,400 and 3,100, respectively, from 2011q2 to 2012q2. Health services andconstruction each added between 2,500 and 3,000 jobs over the past year. These four main industrygroups account for approximately 63 percent of all private sector gains, with manufacturing

4http://oregoneconomicanalysis.wordpress.com/2012/05/30/update-on-housing/

http://oregoneconomicanalysis.wordpress.com/2012/08/14/oregon-employment-public-sector-trends/5 Each year the Oregon Employment Department and the U.S. Bureau of Labor Statistics revise the employment data

a process known as benchmarking. The current establishment survey (CES), also known as the monthly payroll survey,is benchmarked against the quarterly census of employment and wages (QCEW), a series that contains all employeescovered by unemployment insurance. The monthly CES is based on a sample of firms, whereas the QCEW containsapproximately 96 percent of all employees, or nearly a complete count of employment in Oregon. The greatest benefitof the CES is the timeliness monthly employment estimates are available with only a one month lag and theseestimates are reasonably accurate. However the further removed from the latest benchmark, the larger the errors. TheQCEW is less timely as the data is released publically approximately 3-4 months following the end of the quarter. Thegreatest benefit of the QCEW is that is a near 100 percent count of statewide employment. For these reasons, the CES isusually used to discuss recent monthly employment trends, however once a year the data is revised to match thehistorical QCEW employment trends. The last month of official benchmark data is June 2011. The QCEW is currentlyavailable through March 2012, thus the preliminary benchmark used here covers the July 2011 March 2012 period.
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Figure O.1

Nonfarm Job Growth by State

July 2012 over July 2011(Ranked by Percent Change)

Source: Blue Chip Job Growth Update, W.P. Carey School of Business, Arizona State University

Bottom 10 Middle 10Fourth 10 Second 10 Top 10

Oregon: 26th

accounting for another 13 percent, or 3,200 jobs. Within manufacturing, gains were led by durablegoods, particularly metals and machinery.

Labor Market Rankings

The Office of Economic Analysis examines four main sources for jobs data: the monthly payrollemployment survey, the monthly household employment survey, monthly withholding tax receipts

and the quarterly census of employment and wages. Right now, all four of the sources are indicatingcontinued growth, although the monthly payroll employment survey is lagging somewhat relative tothe other data. Oregons labor market is improving right along with the nation overall, if not a littlebit faster.

The most recent job growthrankings, published by ArizonaState Universitys W.P. CareySchool of Business, places Oregon26th in the nation for job growth.Between July 2011 and July 2012,

jobs increased by 16,600, or 1.03percent. Last July, Oregon ranked27th. Washingtons growth has beeneven stronger; measuring 1.9percent of the past year. This ranks13th best among all states. Therelative performance of the fiftystates is shown in Figure O.1.

North Dakota retained the 1st

rankedposition with job growth of 6.88percent, a ranking it also held a yearago. Elsewhere in the region, Californias job gains ranked 2nd and Idahos 22nd among the 50states.

Employment Growth by Metropolitan Size

Last quarter, part of our analysis focused on the differences between Portland and the rest of thestate. It was argued that much of rural Oregon has missed out on the economic recovery due to themix of industries in these areas. This quarter, the regional focus is on the different employmentgrowth patterns experienced by metropolitan areas. How much, if at all, does city size help explaineconomic performance over the business cycle? Also, how do Oregons MSAs compare relative totheir national peers of similar size?

Portland is driving Oregons statewide employment growth while the other metropolitan areas andmore rural areas have yet to fully share in the recovery, if at all. Seattle and Washington largelyfollow the same pattern. Portland and Seattle are large, urban centers that represent over 50 percentof all jobs in their respective states. How have the other large metropolitan areas across the countryfared economically? Examining the 29 largest MSAs in the country all metros with a populationlarger than 2 million reveals that each one has seen employment growth in recovery. Over two-thirds of the largest cities, 20 out of 29, have experienced growth at least as strong as the nationalaverage, with 8 cities Portland and Seattle included growing at least 50 percent stronger than thenational average in recovery.
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Graph O.2

0%

20%

40%

60%

80%

100%

Before or at U.S.Trough

After U.S.

Employment Trough Date

< 50k

50-100k

100-200k

200-400k

400-600k

600k - 1 m

1-2 m

> 2m

0%

20%

40%

60%

80%

100%

Before or At U.S.Peak

After U.S.

Employment Peak Date

< 50k

50-100k

100-200k

200-400k

400-600k

600k - 1 m

1-2 m

> 2m

Graph O.3

-18%

-15%

-12%

-9%

-6%

-3%

0%

< 50k 50-100k 100-200k 600k - 1 m

Employment Losses by City Size

0%

1%

2%

3%

4%

5%

< 50k 50-100k 100-200k 600k - 1 m

Employment Gains by City Size

Corvallis

Medford

Bend

Eugene

Salem

Portland

Corvallis

Medford

Bend

Eugene

Salem

Portland

U.S.

Median

U.S.

Median

Broadening the analysis to examine all U.S. metropolitan areas (totaling more than 370) reveals thatthe representative (median) city from each size group have fared about the same. However, thesmaller cities employment less than 50,000 did lose more jobs during the recession than thenational average. Cities in the three largest groups employment greater than 600,000 alsotypically saw larger losses, but also stronger gains so far in recovery. One reason for this is the factthat larger cities turned around first, relative to cities of other sizes.

As seen in Graph O.2, itdoes not appear that city sizehad any particular affect onwhen an MSA began losingjobs as the Great Recessionwas an equal opportunitydisaster. However, withinthese groups there isvariation and those citiesthat experienced a largerhousing boom and bust

typically went down first.

Two factors likely playing arole in recovery are a citys exposure to both housing and government, as previously discussed, thetwo main economic drags this business cycle. Smaller cities have a larger share of their workforcein both construction and government not because they have so many of these jobs, but ratherbecause they do not have as many other types of jobs (advertising firms and ballet dancers, as twoexamples) to offset these industries. Given the severity of the housing downturn and governmentausterity in recent years, having more local exposure to these two sectors has typically resulted in adeeper recession and/or a slower recovery.

Turning to Oregon, Graph O.3 compares the economic performance of each Oregon MSA relativeto its national peers, based on city size. The red bars are the median city nationwide in each cohort.

Corvallis is outperforming its small metro peers. Portland is slightly more volatile than its peers, butoverall has fared just about the same as other large cities. Oregon differs most in its small to


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medium sized metros. Bend and Medford took an outsized hit during the recession largely theaftermath of their substantial housing downturns

6 and have only come back slightly from their

employment lows. A similar story can be told for Eugene and Salem, however not quite as severe.Stepping back and examining Bend, Eugene and Medfords employment, it appears that theyrecontinuing to bounce along the bottom with no sustained improvement. From their lowest pointseach city has seen 1-2 percent employment growth. Salem is somewhat of a different story as it isnow clearly losing jobs again. Salem still has seen some job gains for the recovery as a whole, but

the recent trend is certainly negative.

The regional differences in economic performance across Oregon are expected to lessen goingforward. As the housing market continues to heal and state and local governments stop cutting back,drags on economic growth in rural areas will lessen. Farm income remains healthy, and marketconditions are stabilizing for many woodproduct firms. Expectations are not for strong growth, butat least a sustained upturn in many areas.

7

Employment in the Most Recent Quarter

Table O.1 shows a comparison of preliminary estimates for second quarter Oregon employment

growth compared to the June 2012 forecast. Unless noted otherwise, all percentage rates discussedreflect annualized rates of change for second quarter 2012. When the preliminary estimate is lowerthan OEAs forecast, forecast error is shown as negative. Positive forecast error then means that thepreliminary estimate came in higher than OEAs forecast. The preliminary estimate for secondquarter employment was slightly higher than forecast, however the growth rate was slightly lowerthan forecast. This arises due to employment revisions to prior months, in particular, the preliminarybenchmark employment figures for the first quarter. Overall employment was 1,900 above forecastfor the quarter for an error of 0.1 percent. The second quarter continues the slow growth trend thatboth Oregon and the U.S. have experienced since the depths of the recession in 2009. Some quartershave exhibited stronger growth, and others weak, however the trend has been relatively steady forthe past two years.

6http://oregoneconomicanalysis.wordpress.com/2012/05/23/more-on-home-prices/

7http://oregoneconomicanalysis.wordpress.com/2012/08/10/employment-by-metro/
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Regional Trends

Total nonfarm employment in Oregon rose by 0.7 percent from the second quarter of 2011 to thesecond quarter of 2012. This marked the states seventh consecutive quarter of positive year-over-year employment growth. Employment growth varied from one region of Oregon to the next. In thesecond quarter of 2012, four regions experienced quarterly employment gains from the previousyear: the Portland area; Central Oregon; Southern Oregon; and the Northeastern region.Employment declined between the second quarters of 2011 and 2012 in the Willamette Valley, theSouth Central-Southeast region, the Columbia Gorge, and along the North Coast. Employment wasessentially flat over the year for the South Coast region.

Table O.1

Total Nonfarm Employment, 2nd quarter 2012

(Employment in thousands, Annualized Percent Change)

Y/Y

Change

level % ch level % ch level % % ch

Total Nonfarm1,638.1 0.6 1,636.2 1.0 1.9 0.1 1.2Total Private 1,347.9 1.3 1,345.2 1.6 2.6 0.2 1.9

Natural Resources and Mining 7.3 (1.0) 7.3 2.5 0.0 0.1 5.9

Construction 71.6 3.7 68.4 (1.5) 3.1 4.5 4.1

Manufacturing 171.4 2.4 171.2 (1.0) 0.3 0.2 1.9

Durable Goods 121.1 2.6 121.5 0.7 (0.4) (0.3) 2.0

Wood Product 19.6 3.4 19.3 3.8 0.3 1.4 1.3

Metals and Machinery 34.8 6.1 34.9 6.6 (0.1) (0.3) 4.6

Computer and Electronic Product 37.0 3.5 37.5 8.1 (0.5) (1.4) 1.8

Transportation Equipment 10.8 (3.7) 11.1 (2.7) (0.3) (2.8) (1.2)

Other Durable Goods 19.0 (2.4) 18.7 (21.7) 0.3 1.6 0.3

Nondurable Goods 50.3 1.8 49.6 (4.9) 0.7 1.3 1.6

Food 24.9 1.9 24.3 (11.8) 0.6 2.4 2.8Other Nondurable Goods 25.4 1.7 25.4 2.5 0.1 0.3 0.6

Trade, Transportation & Utilities 315.7 1.4 315.9 (1.1) (0.2) (0.1) 1.0

Retail Trade 186.9 1.8 186.7 1.0 0.2 0.1 0.9

Wholesale Trade 75.3 1.7 75.1 1.2 0.2 0.3 1.4

Transportation, Warehousing & Utilities 53.5 (0.4) 54.1 0.7 (0.6) (1.2) 0.8

Information 32.2 3.5 31.8 (0.5) 0.4 1.1 0.5

Financial Activities 91.8 0.7 92.5 1.4 (0.7) (0.8) (0.4)

Professional & Business Services 194.3 0.2 194.2 5.1 0.1 0.0 3.9

Educational & Health Services 237.8 1.0 236.8 (1.0) 1.0 0.4 1.8

Educational Services 34.3 3.8 32.4 (9.6) 1.9 5.7 5.0

Health Services 203.5 0.6 204.4 2.9 (0.9) (0.4) 1.2

Leisure and Hospitality 168.2 1.2 169.1 3.6 (1.0) (0.6) 1.9

Other Services 57.8 (0.2) 58.0 3.1 (0.2) (0.4) 1.8

Government 290.2 (2.5) 290.9 (2.0) (0.7) (0.3) (2.1)

Federal 27.7 (5.7) 28.2 (2.2) (0.5) (1.9) (2.8)

State 79.9 (2.0) 80.2 (0.6) (0.3) (0.4) (1.0)

State Education 31.6 2.0 31.5 1.1 0.1 0.2 1.6

Local 182.7 (2.2) 182.6 (2.6) 0.1 0.1 (2.4)

Local Education 94.0 (3.0) 93.4 (5.5) 0.7 0.7 (3.9)

Estimate

Preliminary Forecast ErrorForecast


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Portland Unemployment Rate

0%

2%

4%

6%

8%

10%

12%

14%

Jan-90 Jan-94 Jan-98 Jan-02 Jan-06 Jan-10

Recession U.S. Oregon Portland MSA

0.0%

4.0%

8.0%

12.0%

16.0%

Portland 5-County

ColumbiaGorge

North Coast Northeast WillametteValley

South Coast SouthCentral - SE

Cent ral Southern

Unemployment Rates Fell in All Regions, 2Q2011 to 2Q2012Not Seasonally Adjusted

2Q2012 2Q2011

Every region posted lowerunemployment rates (notseasonally adjusted) in thesecond quarter of 2012 thanduring the second quarter of2011. Rates ranged from a low of7.4 percent in the Oregon portion

of the Portla

Oregon Economic Forecast Report

Documents

Transcript of Oregon Economic Forecast Report