Bend and the bulk of Central Oregon currently sits in a “sweet spot” of expanding economic activity, noted economist Dr. Bill Watkins told a packed audience of local business and community leaders during his annual address to the Center for Economic Research and Forecasting (CERF) Business Conference.
The California Lutheran University associate professor told attendees at the Riverhouse Conference Center event, now in its seventh year, that indicators were on the rise across the board, observing: “Right now, Bend and most of Central Oregon is in a business cycle sweet spot.
“Jobs are increasing. Economic activity is increasing. Property values are increasing. These are the good days.”
However, he cautioned, unless Central Oregon’s economy goes through the “unlikely event” of a profound transition, a down cycle will inevitably occur again, and “businesses, non-profits, governments and individuals would be well advised to use this prosperous period to prepare for that downturn.”
But, in his analysis of more recent activity and beyond, 2014 was a “great year” for the local economy.
As of November last year, Central Oregon had 81,060 jobs. While still down almost 4,000 from the pre-recession number, 3,280 new positions were filled in a 12-month time span and the type of work continued to evolve compared to traditional history.
He said the changing face of employment in the region was seeing education and health services sectors notably on the rise, though jobs in the manufacturing and mining, logging and construction industries may never recover to their pre-recession levels.
He observed that employment growth had not been evenly distributed throughout Central Oregon though. Jefferson County was the region’s best performer in terms of getting back to pre-recession levels, down only 3 percent and enjoying 3.9 percent job growth last year.
Deschutes County was right behind, with a net job loss of only 3.1 percent of pre-recession jobs and 4.4 percent job growth last year, meaning it would very likely recover to at least pre-recession job levels in 2015.
And Crook County was the region’s “weak sister.” It is down 1,600 jobs or a “whopping” 22.2 percent from its pre-boom high, with the job losses having hit almost every sector.
Watkins added: “Only the information sector is up, because of the county’s server facilities. Gaining only 100 jobs last year, it’s not clear that Crook County’s economy will ever recover to pre-recession levels.”
He also observed California’s importance in relation to the mechanics of Central Oregon’s economy, saying: “It starts with a link between California’s Bay Area and Bend. This is the source of much of Bend’s and Central Oregon’s economic volatility.
“When the Bay Area does well, Bend will do well. When the Bay Area economy has problems, Bend’s economy will have problems. There are other influences, but the Bay Area dominates.
“The tie between the Bay Area’s economy and Bend’s economy is not synchronous, though. It works with a lag of several months. Even the lag length can vary between economic cycles.
“We think of it as external shocks to Central Oregon’s economy. Right now, the region is enjoying the benefits of a positive shock. In 2009, it suffered from a negative shock.
“In Central Oregon, economic changes of this nature tend to radiate from Bend, first to Redmond and the resorts, then generally outward.
“This leads to several obvious prescriptions. Bend can minimize volatility by limiting its dependency on the Bay Area. This is best done by developing sources of economic growth that are not tied to California.
“The expansion of OSU Cascades will help with this. The rest of Central Oregon can minimize volatility by developing sources of economic growth independent of Bend.”
On the real estate front, the Bend market was “hot,” with per square-foot prices increasing steadily.
Watkins said: “Sales in Bend are at what might be characterized as normal, well above the dark days after the crash but below the crazy pre-crash months. Days on market are reasonable too.
“Perhaps most comforting, is new construction is up, but well below the pre-crash days. The Redmond’s market is also up, but it doesn’t display the exuberance of Bend. Prices are up, but sales have been steady for several years now. There is very little new construction.
Again, Watkins drew a parallel between the Bend area and California, adding: “What we think we’re seeing is that Bend’s market is being driven by California’s booming Bay Area.
“The Bay area is enjoying the twin booms of real estate and venture capital. Huge amounts of wealth are being created, and some of that wealth finds its way to Bend.
“It hasn’t persisted long enough though to spill over to Redmond. If it persists, it will.
“This tie to the Bay Area, though, is a mixed blessing. Deschutes County’s economy suffered mightily when California’s markets collapsed. We hope it doesn’t happen again, and we encourage Central Oregonians to use these good times to try and diversify away from California.”
Disparity in the real estate market recovery was again in evidence in regards to geographic location, with Crook County’s experience telling another story. Sales and sales prices have been essentially flat for almost two years and days on market remaining high, with no discernible trend identified.
Jefferson County was showing price increases, but those increases were small relative to most markets observed and well below those seen in Deschutes County.
Sales numbers remained relatively unchanged, with perhaps a small upward trend. Similarly, days on market remain high, but “if you look closely and optimistically, you might see a declining trend. If there is one, it’s weak.”
Earlier in the conference, nationally acclaimed speaker, author and President of The Innovation Resource, Robert Tucker gave an entertaining and insightful talk on the importance of innovation to business and practical steps for its implementation.
He followed with an “Intelligent Talk Show” format airing the subject with innovative business leaders including Patricia Bartelson of Straw Propeller gourmet foods, Doug King of Epic Air and Issac Toplin of rising tech company Choose Growth, which specializes in cutting edge developments in the education field.
