Recovery continues in Central Oregon
Economic index shows growth in housing, tourism
By Joseph Ditzler / The Bulletin
Published Dec 8, 2013 at 12:01AM
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.
Economic recovery in Central Oregon continued in the third quarter, driven again, in part, by gains in the housing market and in travel and tourism, according to an economic index released today.
However, labor trends were mixed. Hiring picked up, but unemployment claims grew, as well, although not at a pace inconsistent with job growth, according to University of Oregon economist Timothy Duy.
“The region is clearly rebounding after the long period of stagnation that followed the housing bust,” Duy wrote in his quarterly assessment.
Duy tracks nine indicators that make up the index. They measure trends in areas such as payroll, housing units sold, Deschutes County building permits issued and county initial unemployment claims, for example. The Central Oregon Business Index rose 1.1 percent over the past three months to 120.2, a figure 5.6 percent higher than the third quarter of 2012. The benchmark index is 100, measured in 1998.
“Prior to the housing boom and bust, there was a pretty steady dynamic in the Central Oregon region driven by in-migration, business development and tourism and travel development,” Duy said Wednesday. “I don’t see why we can’t return to that dynamic.”
High points of the index include a gain of nearly 16 percent in estimated lodging revenue over the same period in 2012. The story behind tourism’s recovery in Central Oregon is both straightforward and nuanced. It represents both a collective sigh of relief and loyalty to leisure pursuits.
“There are certain things we’ve promoted in the Oregon economy that are little luxuries for lots of people,” Duy said, citing as one example Bend’s craft breweries. “We’ve promoted lots of industries that are attractive even for consumers of relatively limited means.”
On the other hand, increased spending on leisure activities signals a relaxation of anxiety that plagued workers who for four or five years feared imminent layoff. Those consumers now have money to spend and opportunities to travel, said Duy.
“If you look statewide, there’s a pretty strong leisure sector. It didn’t suffer the lasting damage we thought it might have,” he said. “Even though individuals and households were hard hit, they’re still interested in using their money for leisure-type activities.”
In the housing sector, Duy reported residential sales rising to an average 421 a month, above the pre-boom average of 259, but below the peak in the second quarter of 2006. Demand also fuels construction, with an average 139 building permits issued each month during the quarter, he wrote.
However, Duy writes, “room for further improvement may be limited.”
As existing inventory clears out and interest rates begin to rise, recovery in the housing sector may slow while construction ramps up, he explained. If some in the real estate business predict a slowdown next year, Duy said, he understands that perception. “Given the pace of housing sales, it’s hard to see stronger gains from here,” he said.
Employment has improved, as well, but has a long way to go before labor is as strong as it was before the bust. The Central Oregon unemployment rate, still high in October in Crook County with 12.1 percent, is improving, nonetheless. Deschutes County’s seasonally adjusted rate measured 9.4 percent unemployed in October, down from 10.7 a year ago.
“Clearly, that’s a good thing, but in the context of a declining labor force, the upshot is that it’s not quite as good as we think,” he said. “We are seeing a relatively broad-based improvement. Certain sectors will be lagging in this recovery.”
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