What's happening in the Beaver State might offer some insights into Washington's future. But be careful taking the comparison too far.
A recent story detailed a pronounced slowdown in Oregon’s tech sector. To blame were some of the usual culprits: Lack of major technology headquarters, a tepid rate of startups, dependence on being an outpost in a few niches and Intel, as well as Portland’s slacker culture.
Josh Lehner, an economist in the state Office of Economic Analysis, offered a more nuanced take on the larger Oregon economy on his must-read blog (wish the state of Washington had something similar). Coming out of the recession, Oregon has seen some of the fastest growth among the states. That seems to be changing.
“Oregon job growth has slowed considerably in recent quarters,” according to Lehner. “While this slowdown has been built into our office’s outlook for years, the severity of the slowing has been more than expected. No longer is the state adding jobs at nearly twice the national rate.”
Still, employment growth is keeping pace with population and state revenue remains healthy. There’s more:
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“Oregon’s economy is hitting the sweet spot, which only happens at or near full employment,” he writes. “Wages for workers are rising faster. In a tight labor market, firms must cast a wider net to fill openings. As such, job candidates who were previously passed over when unemployment was high are now finding work, this includes middle-aged Oregonians, the long-term unemployed, and the like. Importantly, these factors combine to generate strong household income gains in recent years. As such housing affordability has largely stopped getting worse, and poverty rates and needs-base caseloads are falling.”
Take out the tech slowdown — it’s booming here — and much of this also applies to Washington. Average hourly earnings are growing faster in most sectors. The poverty rate has fallen. As of February, food stamp recipients are down more than 9 percent year over year. Alas, we’re also different in the “housing affordability has …stopped getting worse” category. At least in many parts of metro Seattle, house price increases continue to be hot.
One big driver is growth (i.e. demand). From 2013 until last spring, Oregon was leading Washington in the growth of its workforce, more than 3.5 percent annually for many periods. That switched. Since then, Washington has seen larger growth than its neighbor to the south. Both states have been growing at about twice the national rate.
But here’s a cautionary note: Washington’s rate of workforce growth has fallen since January. It was 2.5 percent a year in April. Not bad but some potential for cooling. That could also mark a sweet spot, a welcome break if not a return to 1985 normality in terms of Seattle being an affordable paradise. Unlike Portland, Seattle sits at the headwaters of tech talent, innovation, capital deployment and decision-making.
But with so much uncertain in the other Washington, from the Trump administration’s savage budget-cut proposals and ambivalence on trade to its self-inflicted political crisis — past performance in the Northwest is no guarantee of future results.
Today’s Econ Haiku:
Ford’s new CEO
Chasing bright shiny Tesla
A stock (car) price race