Oregon Oregon’s Economic Outlook Office of Economic Analysis Tom Potiowsky Portland, Oregon April 9, 2010

Employment Losses (through March 2010)

3 Oregon

10.5% unemployment rate for February 2010 (Feb US rate is 9.7%) is up from the latest lowest rate of 5.0% in April 2007 and down from the highest rate of 11.6% in May and June th fastest job growth at -3.03% for all states for February 2010 over February Total nonfarm employment dropped -5.7% year-over-year for the 4th quarter of Job losses (S.A.) from February 2008 to December 2009 (up 1,000 in January). The last six months’ losses averaged 3,250 per month versus 10,017 per month over the first six months of % personal income growth for 3 rd quarter of 2009 over 3 rd quarter of Annualized 3 rd quarter 2009 growth at 1.9%. Oregon exports increased 3.2% in the 4 th quarter compared to the same period last year but finished 2009 down 23% over (Export growth is positive Q/Q and is expected to follow the global economy) Recent Oregon Economy Facts

5 Oregon and ARRA Oregon’s spending allotment is $3.9 billion, plus tax relief measures. Through December 31 st, $2.5 billion has been awarded with $1.7 billion spent. Source:

Unemployment Rate by Region, February 2010 (Not seasonally adjusted for counties) Source: Oregon Employment Department Office of Economic Analysis 10.3% 11.2% 11.5% 14.0% 14.7% 12.1% Oregon: 11.4% (seasonally adjusted: 10.5%) U. S.: 10.4% (seasonally adjusted: 9.7%)

Unemployment rate by MSA designations, February 2010 Note: Portland-Vancouver-Hillsboro includes Clark and Skamania counties in Washington State Office of Economic Analysis Source: Oregon Employment Department

Unemployment Rate by County, February 2010 (Seasonally adjusted) Office of Economic Analysis Source: Oregon Employment Department

Unemployment Rate by County, February 2009 & February 2010 (Seasonally adjusted) Office of Economic Analysis Source: Oregon Employment Department

Median income for Oregon counties, 2008 Office of Economic Analysis Source: U.S. Census Bureau, Small Area Estimate Branch

CLATSOP WASHINGTON MULTNOMAH COLUMBA DOUGLAS LANE LINCOLN POLK YAMHILL TILLAMOOK MARION COOS DESCHUTES MALHEURHARNEYLAKEKLAMATHJACKSON JOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION < $50,000+ Source: U.S. Census Bureau, Small Area Income & Poverty Estimates CLACKAMAS Median income $40,000 – $50,000 Oregon: $50,165 US: $52,029 Less than $40,000 Median Income, 2008

Poverty rate for Oregon counties, 2008 Office of Economic Analysis Source: U.S. Census Bureau, Small Area Estimate Branch

CLATSOP WASHINGTON MULTNOMAH COLUMBIA DOUGLAS LANE LINCOLN POLK YAMHILL TILLAMOOK MARION COOS DESCHUTES MALHEURHARNEYLAKEKLAMATHJACKSON JOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION > 17 % Source: U.S. Census Bureau, Small Area Income & Poverty Estimates CLACKAMAS % of persons under poverty 15 – 17 % Less than 12 % Oregon: 13.5% US: 13.2% 12 – 15 % Poverty Rate by County, 2008 ($20,650 for family of 4)

Annual Population Growth Rate for Oregon and Metropolitan Areas Office of Economic Analysis Source: U. S. Census Bureau; and PSU

Sources: U.S. Census Bureau; PRC, PSUOffice of Economic Analysis Oregon county population change: April 1, July 1, 2009

MARION County Population Growth, April 1, 2000-July 1, 2009 Sources: U.S. Bureau of Census 2000, and Population Research Center, Portland State University 2009 CLATSOP WASHINGTON MULTNOMAH COLUMBIA DOUGLAS LANE LINCOLN POLK TILLAMOOK COOS DESCHUTES MALHEURHARNEYLAKEKLAMATHJACKSONJOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION CLACKAMAS Below 0%5 to 10 %0 to 5 %10 to 20 % Over 40 % YAMHILL

Percent of elderly (65+) in population, 2009 Office of Economic Analysis Source: PRC, Portland State University

Elderly (age 65+) as a percent of total population, 2009 Source: PRC/PSU Office of Economic Analysis 13-16% 9-13% 20-30% 16-20%

Historical Comparison * Estimates based on Global Insight and OEA forecasts

Historical Comparison (through February 2010)

Oregon’s Lost Decade? 2000 Q1 1,605, Q2 1,567, Q1 1,588, Q4 1,602, Q1 1,738, Q4 1,627,407

Industries Beginning to Sort (4 th Quarter 2009)

Initial Claims (through February 2010)

24 Oregon Housing Starts

25 Housing Starts: Oregon & U.S. Office of Economic Analysis

26 Residential Building Permits Percent Change (December Year to Date) Source: U.S. Census Bureau

27 Residential Building Permits Percent Change (December Year to Date) Source: U.S. Census Bureau

Oregon Housing Permits (through January 2010)

Mortgage Loans 6.88 percent of all loans past due (4 th Quarter, 2009) –2001 peak 3.72%, rising since early 2007 –Oregon ranks 8 th best nationally (US average is 10.44%) 2.98 percent of all loans in foreclosure (4 th Quarter, 2009) –Higher than 2002 (1.34%) and rising since late 2006 –Oregon ranks 25 th best nationally (US average is 4.58%) Combined 9.86 percent ranks 10 th best nationally –US average is percent Source: Mortgage Broker’s Association

Oregon was Late to the Run Up in Prices (Jan Dec 2009) Source: LoanPerformance

Selected Oregon MSA House Price Appreciations Annual Percentage Change in FHFA MSA House Price Indexes through 2009 Q4 Source: Federal Housing Finance Agency Medford PDX-Vanc-Bevrtn Bend Salem Eugene-Springfield

Leading Indicators 10 of 11 Indicators are Positive

33 Oregon Exports Oregon Exports by Industry 2008 Q42009 Q4Y/Y % Change Total All Industries 4,237.94, % Computer And Electronic Products 1,805.11, % Agricultural Products % Machinery, Except Electrical % Chemicals % Transportation Equipment % Waste And Scrap % Primary Metal Manufacturing % Food And Kindred Products % Wood Products % Paper %

34 Exports by Industry Source: WISERTrade

35 Exports to China Source: WISERTrade

36 Forecast Changes

37 Total Non-farm Employment (Annual Percent Change)

38 Construction Industry Employment (Annual Percent Change)

39 Wood Products Industry Employment (Annual Percent Change)

40 Wood Products Industry Employment (Annual Percent Change)

41 Computer and Electronic Products Industry Employment (Annual Percent Change)

42 Health Services Industry Employment (Annual Percent Change)

43 Public Sector Industry Employment (Annual Percent Change)

Risks to the Forecast… ▲Upside ▲A v-shaped recovery in other parts of the world ▲Quicker, stronger release of pent-up demand ▲Stronger growth in total factory productivity ▼Downside ▼Premature policy tightening ▼Aftershocks from the financial crisis ▼China bubble? ►Other Considerations ►Impact of Measures 66 and 67 ►Health care reform

45 Bottom Line for the Oregon Economy The “technical” recession in Oregon ended late this summer or late this year. Expect a “jobless” recovery. Job losses will continue into the first quarter of 2010, with only mild job growth the rest of the year. Housing prices may still decline into 2010 but looking more like a bottom has been reached in housing permits. Housing will not lead during the recovery. First sectors likely to come back: profession and business services, health care services, computer and electronic products, retail.

46 Biennial Growth Rates Note: Not including 2009 revenue actions

47 Biennial Growth Rates

48 For More Information Office of Economic Analysis 155 Cottage Street NE, U20 Salem, OR (503)