Has region’s economy entered expansion?
Central Oregon Business Index hits new peak
Recovery no longer describes the Central Oregon economy.
It moved into new territory in the first quarter, a period of expansion, said University of Oregon economist Tim Duy, who compiles the Central Oregon Business Index.
Even though he still uses the word recovery in his summary of first-quarter key business indicators, he concedes the word falls short.
“That’s fair to say, particularly on the employment front,” Duy said Wednesday. “We’ve rebounded quite dramatically since 2012. We’re beyond the pre-recession peak of jobs, which is something of a milestone.”
The Central Oregon Business Index “made strong gains” in the first quarter of this year, Duy wrote in his summary.
The index, which reached a benchmark of 100 in 1998, rose to a new high of 128.8 in the first quarter, increasing over the previous quarter by 2.5 percent and over the first quarter 2014 by 6.3 percent.
The previous peak occurred in second quarter 2006, when the index reached 127.2.
Duy, who’s also the senior director of the Oregon Economic Forum, said he expects further expansion in jobs, housing sales and tourism, as well as other indicators like nonfarm payrolls and building permit numbers.
Home sales in the quarter rose to an average 413 per month in Central Oregon, well above the high of 259 per month sold before the housing bubble, between 1997-2001, according to the index.
Hotels, motels and other types of lodging in Bend produced $2.1 million in lodging-tax revenue, adjusted for inflation. Passengers flying in and out of Redmond reached nearly 44,700 after falling in the third and fourth quarters of 2014. Solid waste dumped at the Deschutes County landfill increased by 787 tons from the previous quarter to 12,060 in the first.
“To what extent can we maintain the patterns of activity that bring about this outcome?” said Duy, who’s also a UO professor. “That relies on the sustained inflow of population that is creating this. One thing we should be watching is the cost of housing and the availability of housing. And I think we’re all aware that housing markets are pretty tight.”
The Beacon Report of Central Oregon showed the median price of a single family home in Bend climbed to $327,000 in March before dropping in April to $309,000.
Meanwhile, sales numbers increased and homes sold faster. A total 203 homes sold in Bend in April, up from 172 the month before, according to the report. The median number of days a property spent on market declined from 137 in February to 101 in March and 78 in April. The trend in Redmond was more marked; the median days on market there fell from 178 in February to 60 in April, according to the Beacon Report.
The cost to buyers of housing and the ability of developers to meet demand were concerns in 2005 and 2006, Duy said. Constraints on the labor supply and the amount of land available for building also bear watching, he said.
“One of the issues that’s been pointed out to me is that builders can’t satisfy that demand for more affordable housing,” Duy said, “until the demand for less affordable housing is satisfied.”
The unemployment rate dropped in all three Central Oregon counties during the first quarter. The 6 percent jobless rate in Deschutes County in March was the lowest since December 2007, according to the Oregon Employment Department. A monthly average of 72,000 people were working in Central Oregon during the first quarter, Duy wrote.
“One sector that will continue to grow is the professional and business services sector and higher paid tech jobs,” he said. But the expansion is taking place across several sectors and not hinged on one sector like construction and housing, Duy said.
“Everything in this community is up, and that speaks to me of fairly broad-based growth,” he said. “That’s the main point here.”
— Reporter: 541-617-7815, email@example.com
Editor’s note: The Bulletin has partnered with the University of Oregon’s College of Arts and Sciences and Department of Economics to produce the Central Oregon Business Index. The index provides a regular snapshot of the region’s economy using economic models consistent with national standards. The index, exclusive to The Bulletin, appears quarterly in the Sunday Business section.