Job Loss, Decline in Economy — Is the Free Fall Over?

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If there is one thing that the two economists who visited Bend recently agree on is that Oregon, like the country, is in the tank and that no growth (rather than a negative balance sheet) is good news.
In January Bill Watkins, PhD., executive director of The Center for Economic Research and Forecasting at California Lutheran University, gave a dismal picture of Central’s Oregon’s economy noting at the time that we would soon see more than 15 percent unemployment in our region. He was right of course, but no one wanted to believe him and few actually did.

In fact, Dr. Watkins’ prediction this past January in a nutshell was this: unemployment is up to 11 percent and will rise to 15 percent (right here in Bend), property values will continue to decline, commercial vacancy rates will go up, retail sales will be down, tourism will fall, foreclosures will be massive….and all of this and more will continue until at least the third quarter of 2010.
Yikes, and we’re only in the third quarter of 2009.

Dr. Watkins, who collects research on labor markets, demographic trends and agriculture and then forecasts results, also helps private firms and governments develop economic plans. He was back in Bend a couple of weeks ago to talk about the next forecast project he is working on for Central Oregon that will be unveiled at a public forum in January 2010.

He also took time to give us an updated short-version of the forecast. While he noted all the economic turmoil facing the country, he did have a slightly different tune from January about our regional economy that gave a little hopeful push: the population in Bend is still growing, slow but positive with young people with families moving here to start small businesses. In fact he said that the small business job gain in Bend is better than anyplace he’s seen in months.

He suggested that Central Oregon’s job losses may have peaked and we have infrastructure in Central Oregon that can sustain further growth.  Dr. Watkins also concluded that new people moving here are bigger risk takers willing to start new businesses, many from California, who could just be the catalyst that could save our economy.

Enter Timothy A. Duy, director, Oregon Economic Forum, University of Oregon. Dr. Duy was in Bend last week to address the annual meeting of the Economic Development for Central Oregon. His presentation was sponsored by The Bulletin.

Dr. Duy presented a rather dismal picture of the local economy saying the local activity is likely to remain subdued as the economy transitions away from a housing dependent growth dynamic. Unemployment claims are up although there are some indications that there is a slowing of hiring rather than a continuing decline of layoffs. Lodging revenues are down but the airport boardings have stabilized. Home sales are still down although they should improve now that property prices have become more reasonable. Building permits are basically at zero and we already have too much housing available on the market. Lastly, the Central Oregon Business Index really can’t get any worse, it now has no place to go but up.

Guess we pretty much knew all of that.

Dr. Duy added that it seems fewer people are saying this month is worse than last month. It doesn’t mean it’s a show of growth, just not as bad as it was. Things have leveled out and we’re not in a free fall any more.

Dr. Duy’s summation is that Bend has a particular growth dynamic compared to other places: lower home prices will be attractive as is the lifestyle. We will eventually regain a positive growth dynamic and revert to a steady growing community. However, he doesn’t believe we have the infrastructure to sustain growth, we don’t even have an interstate and how can we grow, he insists, without an interstate highway? We are also lacking access to a research university. Further, the region is relatively small, making it harder to attract firms, especially in high tech industries.

But wait! A report on local news channel KTVZ21 says that the economic consulting firm, Moody\’s Economy, just came in with some positive economic news: the Bend metro area is listed as one of the only metro areas in the entire country with job growth forecast in the coming year. The Bend area is expected to see a job growth rate of 1.1 percent over the next year (the fifth-highest rate in the entire country).

Surprising in that most of the news about our regional economy has been pretty dismal, but the report goes along with what both Watkins and Duy are saying: we reached the bottom and the only way to go is up!

However, before you take any of this as gospel, remember this (and what Dr. Watkins said last January): You may not always agree with our analysis. That\’s great. Economists are famous for disagreeing. We provide our analysis. We hope you analyze many opinions and come to your own conclusions before making important decisions.

Here’s to up!  PHA

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