PHOENIX - Oregon's economy continues to expand at full throttle despite some worrisome long-term signs, according to the state's newly-released economic forecast.
Wednesday's cautiously optimistic report, a new version of which is released four times a year by the state's Office of Economic Analysis, showed that Oregon's economy is generally stronger than the U.S. average and has experienced job growth more than sufficient to keep pace with population growth.
"While some U.S. data is slowing or showing worrisome signs, Oregon's expansion continues to see full-throttle rates of growth," the report said. "Oregon is outpacing the typical state by a considerable margin today for both job and income gains. This growth differential largely comes from the state's underlying fundamentals like its industrial structure and strong in-migration flows."
But the report did note that job gains in the state have slowed compared to the very high levels of 2015, and the result has been a "tightening" of the labor market.
"Overall this marks a return to what can considered normal labor market dynamics," the forecast said. "First, strong job growth diminishes economic slack and the pool of potential workers from which firms hire. Second, as labor becomes scare, businesses must compete more on price to attract and retain the best employees. Wages rise for workers. Third, more individuals begin to look for these now more-plentiful, and better-paying jobs. Currently, the Oregon economy is in this virtuous cycle in which all of these dynamics are taking place."
In terms of its general fund revenues, the forecast calls for the 2015-17 biennium figure to reach $18.02 billion. This represents a decrease of $1.3 million from the June 2016 forecast, and an increase of $1.9 billion relative to the 2013-15 biennium. General Fund revenues for the 2015-17 biennium are now expected to come in $24 million above the close of session forecast.
A coming pressure, the report notes, is the dramatic change in workforce demographics imminent with an aging population.
"Revenue growth in Oregon and other states will face considerable downward pressure over the 10-year extended forecast horizon," the report notes. "As the baby boom population cohort works less and spends less, traditional state tax instruments such as personal income taxes and general sales taxes will become less effective, and revenue growth will fail to match the pace seen in the past."
Oregon Gov. Kate Brown was upbeat about the state's strong short-term growth, but reinforced the need for long-term caution.
"Oregon is in its 50th straight month of job growth, and state revenues are reported to be stable in the short term," Brown said. "The same cannot be said for the rest of the country, however. Economic slowdowns elsewhere call for caution. We will pay close attention to these national signals."