The news out of the State’s Office of Economic Analysis was mostly positive this week with the release of the state’s third quarter Economic and Revenue Forecast.
Oregon continues to see healthy rates of economic growth, however we are not immune to national and international developments. While topline manufacturing indicators in the state look good, cracks may be forming due to the trade war. All told, Oregon continues to hit the sweet spot for now. Growth is strong enough to keep up with an increasing population and deliver economic and income gains to Oregonians. The share of working-age residents with a job is higher than the nation’s average and both wages and overall household incomes continue to rise.
The September forecast reflects a stable economic outlook, but heading into the new biennium, uncertainty about the performance of the nationwide economy has become paramount. Growth will certainly slow to a sustainable rate in the coming years, but Oregon is better positioned than ever before to weather a revenue downturn. Automatic deposits into the Rainy Day Fund and Education Stability Fund have added up over the decade-long economic expansion. When the expected ending balance for the current biennium is included, Oregon has more than $2.5 billion in reserves set aside, amounting to more than 12% of the two-year budget.
The impacts of the trade war with China are only beginning to be felt. Given the recent Chinese retaliation of not buying any U.S. agricultural products, the International Monetary Fund recently modeled various U.S. – China trade scenarios and found that Oregon agriculture does see more exposure than many states and those exports are currently down. Oregon’s agricultural exports include a variety of specialized products such as fresh berries, fruits and hazelnuts. And while it may be easier to find new international markets for commodities such as soybeans, wheat and corn, it is more difficult to establish new markets and find new customers for specialized or niche products and services as they are not as interchangeable as commodities. As such, it will likely take more time for global trade patterns to shift for these customized products.
Oregon businesses that are start-ups are at an all-time low, with data starting in the late 1970s. Associated start-up employment follows a similar pattern. The concern is that new businesses are generally considered the source of innovation and new ideas, products and services that help propel economic growth. To the extent that fewer start-ups indicate that R&D more broadly is not being undertaken, slower growth is to be expected moving forward. If the larger firms that have won out in today’s marketplace are investing in innovation-related R&D perhaps the worries about the number of start-ups today may be is overstated. However these longer run, downward trends in new business formation warrants, at the very least, concern about future growth prospects.
Importantly, Oregon does enjoy the long-term advantages of low electricity costs; a central location between the large markets of California, Vancouver and Asia; clean water; low business rents and living costs when compared to other Left Coast locations; and an increasingly diverse industrial base.
Last week I attended the Legislative Council on River Governance (LCRG). This group, composed of legislators from the Columbia River states of Oregon, Washington, Idaho, and Montana, meets to discuss common challenges and emerging opportunities faced by the people living and doing business in the Columbia River Basin. We share strategies to address common challenges and work together to leverage new opportunities. At the Council meeting, we received an overview of the Columbia River Treaty negotiations, regional impacts of energy policy on the Columbia River Basin, fishery issues, and aquatic species prevention. This included a demonstration of canine deployment to detect quagga and zebra mussel contamination on marine vessels.
There have been so many great activities I have enjoyed in the District, special times with family and friends. One of the fun events I was able to attend was the Wings and Wheels at the Scappoose Airport. Hosted by the South Columbia County Chamber, this terrific event included an amazing array of cars, antique airplanes, booths, music and activities. Congratulations to all for an outstanding community event.
It is hard to believe that summer is ending and the new school year is right around the corner. But as fall approaches, my legislative Town Hall meetings are continuing, and I hope you can come out and join the discussion.
Scappoose: Saturday Sept. 7, 10:30 a.m. - Noon / Library - 52469 SE 2nd Street
Rainier: Saturday Sept. 7, 3:30 – 5 p.m. / Senior Center - 48 West 7th Street
Even when the Legislature is not in session, it is my honor to represent you and work on your behalf. If you have an issue or concern with a State agency, please contact my office. We check the emails and phone messages regularly and will see what we can do to help.