Local economy retains resiliency
Rogue Valley building permits jump 21 percent, a result of growth and low interest rates
While Oregon's economy lags behind the rest of the country, the Rogue Valley's has remained resilient in many ways, U.S. Bank economist John Mitchell told a Chamber of Medford/Jackson County forum gathering Monday afternoon.
Building permits rose 8.8 percent statewide through the first 11 months of 2001, while in Jackson County permits jumped 21 percent.
"There's that dichotomy of a relatively sustained economy, but the strength is in residential building activity reflecting both population growth as well as relatively low interest rates," Mitchell said at Rogue Valley Country Club.
"You're certainly not immune to the cycle, but your (economic) mix has held up much better than the state as a whole."
He noted the state lost 36,600 jobs during the past year, while Jackson County lost only 60 jobs from a base of 76,000.
"The point you need to remember from the statewide perspective is that this is a business cycle, not a trend," Mitchell said. "If you step back and look at Jackson County between 1991 and 2000, employment rose by 35 percent over that time period. In the last 12 months it went down by one 10th of — percent.
"Put into perspective, the trend is still positive. It is going up and is going to remain so."
The industries that drove Oregon's economy in the 1990s and provided extraordinary growth remain and will rebound. He said the dispersion of economic activity from principle cities following Sept. 11 favors an area like Jackson County.
"The climate, transportation access, the relative proximity to major metropolitan areas to the south and north ... tourism, those sorts of things bode well," he said.
"That dispersion may be a card that economic development people down here can play. You have the infrastructure and location. It might be a good place for remote processing or district servicing or attracting foot-loose kinds of firms. It's helped you over time and it's likely to be an advantage as we move ahead."
The county's not entirely immune, though. The same weakness in manufacturing that struck nationally had its impact here, he said. "Nobody is really immune from the cycle. But it's been much more moderate here than it has been elsewhere in the state. So I suspect you'll continue to outperform the state as you have over the course of this cycle and basically through much of the last decade."
Mitchell predicts the state's economy will regain its stride in the second half of this year. But he said that it won't be the housing market leading the way.
"It can't happen this time, because this is a recession with happy Realtors," Mitchell said.
Nationwide, 2001 housing sales at 5.25 million clip and a rise of building permits by — percent don't generally don't mark a recession. But low interest rates spurred a demand.
Neither will a demand for durable goods such as automobiles - which generally builds up during recessions - fuel a recovery.
"It isn't going to happen, can't happen," Mitchell said. "Last year you had those great sales on motor vehicles. I really didn't need a car, but I really wanted a zero percent loan. People who were thinking about buying a car in the first quarter or first part of 2002 very likely already did it.
"When the economy comes back, it's going to be a different recovery than you and I have been accustomed to in the past."
Debt service and a shift of resources to national defense and security will have an impact as well. But when warehouses start emptying, manufacturers will have to hire rapidly.
"The critical thing to watch is business capital spending," Mitchell said. "When you see that start to strengthen that should help bring Oregon along with it."
Reach reporter Greg Stiles at 776-4463 or e-mail .