Oregon economy set to emerge from pandemic-induced recession
The state’s most recent economic forecast projects a rapid recovery from the historic recession sparked by last year’s pandemic. Consumers will have money to spend. The workers will have a lot of jobs. But employers will struggle to fill vacancies, inflation is certain and a key industry in the Salem area has been hit.
A “ Now Hiring ” sign in front of Boon’s Treasury McMenamin location on Monday April 26 (Amanda Loman / Salem Reporter)
With no “real signs of permanent damage or economic scars” from the pandemic, incomes for Oregon residents are expected to increase and the labor market is expected to return to full health by 2023, latest economic forecast shows of State.
The forecast, released last week, offers a distinctly optimistic picture of the state’s economy in the years to come. While the outlook is a sharp reversal from the catastrophic forecast released last fall, it underscores the economic challenges facing the Salem region and the rest of the state.
Since the pandemic hit, the federal government has pumped money into the economy in the form of stimulus payments, unemployment payments and additional loans. This resulted in incomes 20% higher than they were before the pandemic, according to forecasts.
“Excluding direct federal aid, revenues are back to pre-pandemic levels and are expected to grow 6-7% this year and next,” the forecast reads.
Unlike previous recessions, this recovery is inundated with jobs, the forecast notes, and companies are now advertising at least as many positions as before the pandemic.
With consumers overflowing with cash, Oregon’s unemployment rate will drop to 4% by 2023, according to forecasts. The unemployment rate in Oregon and the Salem area currently hovers around 6%. He expects job growth “up front,” with the largest job gains occurring in the summer and fall.
“Services such as air travel, hair salons, hotels, nail salons, restaurants, etc. are labor intensive ”, according to forecasts. “These industries will need to quickly replenish their workforce to meet consumer demand.”
During the recovery, employers complained of labor shortages. Forecasts indicate that more than half of Oregon employers have reported difficulty hiring for open jobs.
Strong household finances, along with a lack of child care services and in-person schooling, are predicted to contribute to the strained labor market. Employers can continue to expect a tight labor market for the foreseeable future with the retirement of baby boomers, according to forecasts. It will also contribute to “sharp wage hikes and more abundant employment opportunities,” according to the forecast.
The rapid recovery of the economy carries the risk that the supply of certain materials “may not keep pace with demand”, according to forecasts. With lean inventories and strong demand, forecasts point to shortages of semiconductors, lumber and rental cars, creating “bottlenecks”. Inflation will also “undoubtedly” accelerate in the coming months as production costs rise, according to forecasts. However, forecasts expect price pressures to be “transient”.
“Production must increase to meet the high level of sales, which stimulates overall economic growth,” the forecast says. “However, many manufacturing sectors are already operating at or near full capacity. They are constrained. “
The manufacturing sector employs 184,000 people in Oregon, down 5.5% since the pandemic.
This is particularly relevant to the Salem and Mid-Willamette Valley area, where manufacturing is a key industry. According to figures from the Oregon Department of Employment, manufacturing is one of the region’s largest industries and employs nearly 29,000 people in the Middle Willamette Valley. Since last year, manufacturing jobs have declined 5% in the Salem area.
As manufacturers may begin to rehire workers, the shock to supply chains could leave “local businesses out of the loop,” according to the forecast.
However, the food industry, which employs 6,100 people in the region, has proven surprisingly resilient during the pandemic, according to forecasts. This is despite the collapse of NORPAC, a major food processor in the Salem region, and the industry being prone to Covid outbreaks.
“Food manufacturing is the brightest and most surprising manufacturing development in Oregon over the past year,” according to forecasts. “It is the only sub-sector where local employment has surpassed national employment since the start of the pandemic.”
Another positive point in the forecast is child poverty. The American Rescue Plan Act, signed by President Joe Biden, included an extension of the child tax credit. The expanded credits will increase the after-tax income of the average Oregon family by $ 2,000 and are expected to reduce child poverty in the state by 46%.
Urban areas, like Salem, have suffered more than rural areas during the pandemic with the lack of foot traffic for commuters and declining demand for nighttime entertainment from local residents and tourists, according to forecasts.
But the forecast contained potential good news for the Salem region, where the state government is the largest employer. American Rescue Plan Act funds will direct $ 4.6 billion to cities, counties and the state of Oregon.
If the optimistic recovery scenario outlined in the forecast materializes, revenue for the next two-year budget cycle would increase by $ 576 million, meaning layoffs from the previous recession are less likely.
Contact reporter Jake Thomas at 503-575-1251 or [email protected] or @ jakethomas2009.
JUST THE FACTS, FOR SALEM – We report to your community with care and depth, fairness and precision. Get the local news that matters to you. Subscribe to Salem Reporter starting at $ 5 per month. Click on I want to subscribe!