Economist: No more waiting til next year for rosier times
For several years, Oregonians wondering when the economy will finally turn rosy have heard the same rejoinder familiar to Chicago Cubs fans: Wait til next year.
Well that year may have finally come, according to economist John Mitchell.
2014 is shaping up as the best year for the Oregon economy since the Great Recession, Mitchell said Wednesday, when he presented his annual economic forecast at the Portland Business Alliance breakfast forum.
For starters, he said, there are no signs of a repeat of the fiscal shocks that dragged the economy down in 2013. Those included partisan bickering that led to federal budget cuts known as sequestration; an end to the payroll tax holiday, cutting into consumers discretionary spending; higher taxes for wealthier income-earners; tax increases for Obamacare; and the government shutdown.
That fiscal drag is diminishing, Mitchell said, citing the recent bipartisan budget deal struck in Congress.
And short-term interest rates should hover above zero through next year, he said.
Steady job growth should mean Oregon gets back to the total jobs it had before the Great Recession by mid-2014, Mitchell said. Oregon had the sixth-highest job growth rate the past year, he noted. And Portland recently earned the 9th-best rating out of 100 metro areas in the Brookings Metro Monitor, which measures economic output of metro areas.
Housing prices have risen, broadening the increase in net worth to some of the middle class. That contributes to the wealth effect, Mitchell said, giving consumers more comfort to part with more of their money.
Stock prices are up, and corporate balance sheets are strong. And the world economy is looking healthier, particularly Europe and China, Mitchell said.
But there continue to be causes for angst among those banking on strong economic growth into the future, he cautioned.
Were in the 55th month of this upturn, he said, and the average upturn since World War II has been 58.4 months.
Mitchell looks at the U6 rate more than the unemployment rate, as it includes those who want to work fulltime but gave up looking, and those who work parttime who want to work fulltime. That rate is 13.1 percent, he said, a major concern, especially considering how many of the unemployed have been out of work an inordinate number of months or years.
Despite improvements in the housing market, 8.2 percent of mortgage holders in Oregon still owe more on their loan than their homes are worth.
And we have yet to see the longterm impact of what Mitchell calls two unprecedented experiments. One of those is Obamacare. Some predict that will lead to businesses downgrading fulltime workers to under 29 hours a week, or shedding employees to get below 50, to escape the mandatory health insurance mandate. But others predict the broader availability of insurance will give rise to an increase in entrepreneurship, as people wont be so wedded to jobs just to keep their health insurance, Mitchell said.
Economist views on the impact of Obamacare change daily, he said.
Federal monetary policy also is charting unexplored waters, he said, referring to the Federal Reserves monthly purchases of bonds, also known as quantitative easing.
Though there remain many causes for concern, Mitchell said the indicators suggest a pickup in the growth rate for 2014.