The economic expansion underway in Oregon and in the mid-valley continues to chug along.
Need evidence? Linn County had a 4.8 percent unemployment rate in October 2017, a far cry from the nearly 14 percent rate the county suffered from in October 2009. Look at it another way: Linn County's unemployment rate is nearly 10 percentage points lower than it was eight years ago.
Better yet, it was an increase in private sector jobs that has led the way to recovery: According to statistics from the Oregon Employment Department, Linn County's private sector employers added 1,460 jobs from October 2016 to October 2017. Two sectors that were hit hard during the recession, construction and manufacturing, each added more than 300 jobs during that time, the Employment Department said. That's been great to see.
Benton County's unemployment rate traditionally is among the lowest in the state, and that was the case again in October: The county's 3.3 percent rate was the lowest in the state. (Oregon's overall unemployment rate in October was 4.3 percent; these numbers are seasonally adjusted, to take into account normal fluctuations in the job market.)
Meanwhile, economists from the state of Oregon last week issued their latest forecast regarding the amount of tax revenue the state can expect to collect over the next few years. As you might imagine, state officials keep close tabs on these estimates, and the news was good: The economists said they expected the revenues in the state's general fund for the current two-year budget cycle to be about $20.1 billion, an increase of about $36.6 million from the previous forecast in September. That's not a huge amount in terms of the overall state budget, but it doesn't hurt.
Here's how the state economists started their report: "The economic expansion is expected to continue. Economists see few worrisome signs in the current data."
If you're thinking that's showing an unusual amount of optimism from economists, you're right.
But the economists immediately began to curb their enthusiasm: "However," they wrote, "the economy is poised to enter into a different phase of the business cycle in 2018." They added that the economy is likely to begin to run into supply-side constraints in the near future. How the economy adjusts, and how policymakers react to those changes, "will go a long way toward determining when the expansion ends," they wrote.
The tax reform currently being hammered out in Congress also could have a big impact on the state's revenue stream, the economists noted.
Other troublesome signs linger: The economic recovery in Oregon has not been as robust in the state's rural areas as it has been in urban locations. And even in a place like Benton County, where Oregon State University offers a substantial buffer against economic vagaries, the county has lost more than 6,000 well-paying manufacturing jobs over the last 20 years. (Oregon Employment Department estimates say that the county had fewer than 3,000 manufacturing jobs in 2016.)
Most of those losses occurred, of course, as Hewlett-Packard ramped down manufacturing operations on its Corvallis campus. Smaller manufacturers did pick up some of the slack: The number of manufacturing companies with 19 or fewer employees rose 70 percent in those two decades, from 279 to 473. But, of course, those smaller manufacturers are more vulnerable to economic downturns.
Here's the big takeaway from all of this: Economic trends are cyclical. Expansions eventually cool off. Economies enter downturns. To pretend, as we sometimes do, that busts won't follow the booms is to ignore history. We do that at our peril.
The best time to prepare for an economic downturn is before it happens. As they prepare for what could be a vitally important short legislative session this February, here's hoping state officials keep that firmly in mind. (mm)