Since its recovery from the Great Recession, Central Oregon has outperformed most of the country in economic growth. The key driver of this? New residents.
But now, despite continuing to have three of the fastest-growing counties in Oregon, Central Oregon is facing a slowing rate of population growth compared to the past few years.
People and businesses will undoubtedly continue to move to Central Oregon, but the high cost of housing and a business climate not conducive to growth are starting to take a bite out of this engine of regional development.
Despite this challenge, economic prospects for 2025 and the next few years look favorable — although the opportunities may look slightly different than in the past.
Regardless of rising debt levels, consumer balance sheets are healthy.
Employees continue to see pay increases exceeding the current inflation rate, closing the gap between costs and earnings in 2022 and 2023. The labor market continues to favor employees, although it is more balanced now than in 2022 and 2023.
If you are employed, you should continue to see strong demand for your services, and your pay is likely to rise above the rate of inflation. If you are engaged in an industry that is at high risk of being replaced by artificial intelligence or automation, it might be time to start figuring out your next move.
Inflation and interest rates stabilized in 2024, settling in at levels up from the historically low levels experienced during COVID, but still normal in a healthy economy. We expect the current inflation level to represent the current cycle’s low point.
Inflation will rise again in 2025 and 2026, but not to the levels seen in 2022 and 2023.
The reason? A tight labor market and a workforce that has experienced negative real wage growth since 2021. Workers will be in a strong position to demand higher pay in 2025 and 2026, which will increase the cost of everything.
With a change in power in Washington D.C., we may also see some impact from tariffs and energy policy, although those two factors will likely offset each other. The enormous Federal debt also drives interest rates higher.
The bottom line — 2025 is the time to invest in your business. The prospects for growth are good over the next few years if you have the capacity to deliver. The time to invest in technology to reduce your reliance on labor is now so you can grow your business without finding new employees.
If you have considered buying a home or trading up, do it in 2025. Mortgage and auto rates will likely increase later in 2025 and into 2026.
