U.S. ECONOMY: A lot of unknown unknowns
A year ago, well-known local economist John Mitchell said he did not know how the election of Donald Trump as president would affect the economy.
"I don't think of Donald Rumsfeld very often," Mitchell said of the U.S. defense secretary during the Persian Gulf War, "But I remember when he said there are known unknowns and unknown unknowns. Right now, there are a lot of unknown unknowns," Mitchell told the members of the Portland Business Alliance at the organization's annual economic forecast in January 2017.
Last week, Mitchell said his concerns were apparently unfounded. Despite Trump's unconventional and frequently controversial approach to the Presidency, the local, state, national and global economies are all booming — and they are likely to keep expanding well into 2018, if not later.
"There's a litany of positive numbers," the retired U.S. Bancorp economist said at the PBA's 2018 economic forecast on Thursday morning. They range from record high employment in Portland to the fact that the economies in most nations are on the upswing at the same time.
Although Portland's economic recovery has received a lot of local coverage, Mitchell said more of the rest of the state is doing much better now. Portland added 24,000 jobs last year through November. But other cities in Oregon saw healthy employment increases, too, including Eugene (4,000), Salem (3,200), Bend (2,700), Medford (1,800) and Albany (1,310).
Similar trends are happening throughout the country, creating the kind of labor shortages that are finally resulting in sustained wage increases, Mitchell said. That has been missing from the economy until recently.
In fact, as Mitchell sees it, following the economy has only been this exciting twice before in his lifetime. Once was when he first began studying economics in the early 1960s and Congress passed President John Kennedy's proposed tax cuts. The second time was during the Reagonmics of the 1980s, which included passage of the tax reform measure put together by former Oregon U.S. Sen. Bob Packwood in 1986.
"It's fun to talk about this stuff," said Mitchell, who has been presenting his annual forecasts to the PBA since the 1980s.
At the same time, Mitchell admitted the recovery is causing hardships for some people, including those incomes are not growing fast enough to afford the rent and housing prices increases.
Nicholson and Cruise
Interviewed by the Portland Tribune after his talk, Mitchell said such increases in the region have likely contributed to the visible increase in homelessness, with more working poor joining the chronically homeless who were already living on the streets.
Like with his previous forecasts, Mitchell used a fast-moving PowerPoint presentation to flash charts and graphs at the crowd of business leaders as he roamed the third-floor ballroom in the downtown Sentinel Hotel with a wireless microphone, spicing up his talk with pop culture allusions and even an original poem summarizing the year at the end.
Highlights included the fact that the U.S. economy has been growing for 103 months since the end of the Great Recession, making it the third-largest expansion ever. Mitchell predicts the current expansion will soon surpass the second-longest one that took place in the 1960s, although he did not speculate on whether it would eventually top the record-setting one in the 1990s.
"It's not very often that we find ourselves here," said Mitchell, who nevertheless noted the pace of the recovery has so far been about a sluggish 2 percent a year. He speculated that the tax reform measure passed by congressional Republicans late last year might increase it to 3 percent. But he doubted the pace will ever reach the 5 to 7 percent level of most previous recoveries.
"It's going to take years before we know how it's going to play out," Mitchell said.
Despite the upbeat nature of his talk, Mitchell couldn't resist tossing out the names of two actors to question how much longer the good news will continue. The first was Jack Nicholson, with Mitchell choosing one of his movies — "As Good as It Gets" — to ask if things can get any better.
The other was Tom Cruise.
"'Top Gun' is one of my favorite movies. And you know what the theme song of that movie is, don't you? It's 'Danger Zone.'"