The economy is on a roll
The Rogue Valley should continue to have a strong economy in 2020, and 2019 fears of a possible recession have faded, an Oregon economist predicted at the 17th annual Southern Oregon Business Conference.
“Things that were holding back the economy in 2019 aren’t holding back the economy in 2020,” said Tim Duy, senior director of the Oregon Economic Forum and the author of the University of Oregon Statewide Economic Indicators.
Duy delivered his economic assessment to business leaders at the Southern Oregon Economic Development Inc. conference Thursday at Inn at the Commons in Medford.
Duy said 2019 started with some economists predicting a downturn as global growth slowed and trade disputes heated up.
“The economy hit some headwinds,” Duy said. “We saw the fiscal stimulus fade.”
But Duy and his colleagues predicted last year that we wouldn’t fall into a recession, and he said 2019 ended on a high note.
He also sounded a bullish note on the stock market, which has soared to record levels recently, even though some speculated stocks are overvalued and could spur a large downward correction.
“I’m not seeing that there is a massive dislocation in asset prices,” Duy said.
Lower interest rates have generally helped the economy, and while wage growth hasn’t exploded, it has trended upward.
Oregon has followed these national trends, but one weakness has been the manufacturing sector, which continues a downward employment trend.
Duy said manufacturing has been on a long, slow decline in the U.S. since after World War II, likely suggesting a shift in its importance to the overall economy. Currently manufacturing jobs represent only 10% of the employment picture.
Another weakness that affects western states in particular is the high cost of housing and the lack of available housing.
He said states such as Oregon have made it difficult to add housing, which drives up the prices of houses on the market.
“We’ve restricted our capacity to grow in a lot of western states,” he said.
Other headwinds that could curb Oregon’s economic growth included a new commercial activity tax that started in January, which raised taxes on businesses to bring in about $2 billion to state coffers each biennium, Duy said.
He didn’t think that raising the minimum wage in states would have a significant impact on the economy, noting that many businesses already pay more than the minimum wage.
Increased consumer spending is an indicator that wage growth has kept pace with the economy in general, he said.
Another issue that has provided political fodder in the past is the national debt, which has risen $2 trillion since President Donald Trump took office, hitting a record $22 trillion.
“I don’t get terribly excited about the national debt, Duy said.
He said many countries have large national debts, such as Japan, and it hasn’t appeared to impact their economies.
If we were experiencing high inflation, Duy said that would tend to indicate a country has taken on too much debt.
He said the economy has been continuing a trend of 2% growth annually, a rate that he thinks is healthy.
Duy said he doesn’t share some economists’ concerns that the extended growth in the U.S. economy that began in the early part of the last decade is somehow going to falter.
“There is no reason we have to be in a recession,” he said.
Reach reporter Damian Mann at 541-776-4476 or email@example.com. Follow him on www.twitter.com/reporterdm.