Oregon economy grows, revenue up $540M

Oregon's economy is showing signs of improvement, state economists told lawmakers on Wednesday. The state's economic output grew 2.4% over the past year, nearly closing the gap with the national growth rate of 2.7%. You can see more detailed economic stats for comparison.

State chief economist Carl Riccadonna presented the latest quarterly forecast, suggesting the economic malaise following the COVID-19 pandemic may be dissipating. He noted that Oregon had been trailing the national average by closer to 1%.

Economic Growth and Headwinds

While growth is picking up, significant headwinds remain. The state's unemployment rate is 5.2%, which is still well ahead of the national rate. High fuel prices, elevated inflation, and a slow job market continue to pose challenges.

Riccadonna said his office has "been kind of scratching our head" at Oregon's lagging performance in recent years. He hypothesized that impacts from former President Trump's tariffs, combined with job losses at Intel and Nike, were largely to blame. With tariffs once again in force, he indicated the two major employers may have smoothed out their operational wrinkles. Economists expect more clarity when updated numbers are released at the end of September.

Growth has been driven by sectors like hospitality, real estate, entertainment, and finance. This progress has occurred despite contractions in the construction and manufacturing sectors.

Revised Revenue Forecasts

The forecast brought positive news on state finances. Economists predict state tax revenue for the next budget period, from July 2027 to June 2029, will be nearly $540 million higher than previously expected. This could influence future budget standings.

State economist Michael Kennedy told reporters the bulk of this newly anticipated money, nearly $400 million, is due to bullish expectations about wage growth. "Given the malaise in the job market, it really is more about who's making the money and them making more money," Kennedy said.

The state also now expects an additional $55 million in its current two-year budget, which is just over halfway through. This boost is tied entirely to personal income taxes. Forecasts for corporate income taxes have been revised somewhat lower, a trend Riccadonna attributed to one-time tax decisions rather than a new economic trend.

Political Reactions

The forecast prompted divergent reactions from lawmakers. Democrats acknowledged positive indicators but warned of ongoing struggles for residents.

Governor Tina Kotek said in a statement that while there are promising indicators, too many Oregonians are struggling. She cited rising prices driven by tariffs and high gas prices linked to the war in Iran.

Republicans focused on state policy. House Minority Leader Lucetta Elmer suggested the state is being held back by taxes and regulations that hurt businesses. She highlighted the loss of manufacturing jobs and questioned when the state would listen to business warnings.

The improved revenue forecast, if it holds, would provide a boost to lawmakers as they craft a spending plan in next year's legislative session.