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Is the Next Recession Looming?


“We are constantly being influenced and shaped by the major metro areas across the west,” stated Runberg.

On October 31, 2018, the Bend Chamber hosted its annual Economic Impact Breakfast with Tom Potiowski of the Northwest Economic Research Center, Damon Runberg of the Oregon Economic Employment Department, and Josh Lehner of the Oregon Office of Economic Analysis providing insights and information on what our economy is doing… and where it might be heading.

Damon Runberg made a great point reminding and enlightening us with the fact that Bend is heavily interconnected and influenced by a multitude of metropolitan areas. There is a dramatic interconnectedness of all the major metro areas all along the west coast due to who is moving here and the businesses in these places. “We are constantly being influenced and shaped by the major metro areas across the west,” stated Runberg.

We’ve been in the second longest expansion in history at about 112 months. But, sustaining a +3% growth rate is really a stretch.

With that as backdrop, we know that overall US GDP is slowing. According to the Federal Reserve Bank, we are at the beginning of a slowdown in the economy. We’ve been in the second longest expansion in history at about 112 months. But, sustaining a +3% growth rate is really a stretch. Consumer spending has been driving the GDP, but is forecast to slow down.

Employment rates are high and most indicators show that we’re at near full employment, so that’s good. However, housing permits and the rate of construction is still lagging behind the demand. Hence, we’re seeing the price increases that we are for houses. Construction costs are way up and mortgages are much tougher to come by than in the early 2000’s.

The big takeaway according to Potiowsky… with the Fed looking like they will continue to increase rates and the tariff war that is ensuing, we’re probably looking at a recession being possible in 2020.

At the more local level, Lehner spoke about a slowdown in the economy here in Oregon. But, we’re slowing for good reasons. We’re at near full employment, so most folks have a job. Business sales have never been larger. It’s just that we’re not sustaining that brisk pace of increase.

“We’re at the feel good part of the expansion, which means household incomes are and have been rising,” shared Lehner

“We’re at the feel good part of the expansion, which means household incomes are and have been rising,” shared Lehner. We’re seeing an adjusted-for-inflation rate of 7% increase in household incomes.

So, we have good news, but there are issues. The chief among the issues is housing affordability here in Bend and Central Oregon. The problem isn’t that incomes aren’t keeping up with housing prices, but, rather, that we’re simply not building as much as prior to the great recession. The lack of housing production during the peak of the recession has put us in a hole inventory-wise that we’re still digging out of.

Bottom line, the economic indicators are showing a slowdown, and, due to Federal economic policies, we’re possibly headed for a recession in the next couple of years. Is your company ready? To see the full video replay of the Economic Impact Breakfast, visit our YouTube Channel at https://www.youtube.com/watch?v=hYtGsXU9BJ0&t=22s.

 

 

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