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Salem—State Economist Tom Potiowsky told legislators today (5-25-10) that Oregon's recession is likely over, but current job growth is too weak to overcome losses for the year.
In a presentation of the May economic and revenue forecast to the legislature's revenue committees, Potiowsky said state general fund revenues for 2009-11 are down $511 million from the March forecast, due mainly to lower-than-expected personal income tax collections during the current tax season. The projected ending balance for the current biennium shows a shortfall of $562.6 million.
Lottery earnings, however, are up more than $5 million from the previous forecast, reaching a total of more than $1 billion.
"The first quarter of 2010 marks the first positive quarterly job growth since the first quarter," Potiowsky wrote in the executive summary of the forecast. "We are hesitant to conclude that this is the turning point we have all been waiting for. Given this is an initial estimate of jobs and a seasonally adjusted measurement, we believe this latest quarter is further evidence of a bottoming out of the recession as it relates to the job market."
On the positive side, Potiowsky pointed to "very strong signals" from the Oregon Index of Leading Indicators over the past few months, but cautioned that the Index is useful in identifying turning points in the economy, not in gauging the actual strength or weakness of the state's economy.
"The unemployment rate in Oregon for April is still above 10 percent and has been there for the last six months," the report states. "This is not unusual as unemployment tends to be a lagging indicator of economic activity. Average weekly hours in manufacturing have risen but are still well below levels associated with an expanding economy. Housing permits are considerably higher than a year ago but the level is still reminiscent of recession periods. Housing prices continue to fall albeit at much lower rates. And although the job numbers were positive in this first quarter of 2010, there is still considerable weakness in a several labor sectors."
Revenue Forecast released