Points from the President

By: Ray Phelps

The voters have spoken. As you know, your Chamber opposed the passage of Ballot Measures 66 & 67 since we felt the more appropriate question for Oregonians is tax reform, not higher taxes. Your Chamber continues to believe business will be the leader in bringing economic recovery to Oregon. A thriving business community, both large and small businesses, creates jobs, brings income to families, promotes economic vitality and ultimately raises consumer confidence.

The University of Oregon’s Index of Economic Indicators rose 1.2% in December to 86.8 (1997=100) from a revised November figure of 85.8. Since reaching a low in July 2009, the UO index has risen for five consecutive months as Oregon’s economy pulled out of recession. The UO index was revised to account for an annual update of seasonal adjustment and standardization factors; the revisions resulted on only minor quantitative changes.

I am going to follow the UO’s Index for the next several months. I believe it is one way for us to track the impact of Measures 66 & 67 on Oregon’s economy during 2010 since this Index was compiled immediately prior to passage of these measures. Timothy Duy, University of Oregon’s Department of Economics, reported the following highlights based on December’s Index of Economic Indicators:

• Labor markets are improved. Initial employment claims continue to edge down, signaling a slow but steady reduction in the pace of layoffs, while employment services payrolls – largely temporary employment firms – extended the previous month’s modest improvement, rising to the highest level since last July. This is a sign that some firms need to bolster their workforce in the face of firming economic activity. Overall nonfarm payrolls posted a 2,900 gain on employment increases in manufacturing, education and health services, and the trade, transportation and utilities sectors.

• Residential building permits (seasonally adjusted and smoothed) rose again, continuing improvement from this summer’s lows. Even with the gains, however, residential construction activity remains at very low levels and the industry remains susceptible to decreasing federal support in the months ahead.

• In a very positive development, orders for core manufactured goods rose again, signaling further improvement in business confidence. Pent-up demand from firms that delayed capital purchases during the financial crisis combined with firming economic activity is bolstering manufacturing orders, which will in turn help support Oregon’s manufacturing sector.

• While Oregon’s economy, like the national economy, is no longer in recession, considerable uncertainty about the pace of the recovery remains. The combined impact of inventory correction, pent-up demand, and fiscal and monetary stimulus greatly supported economic activity at the end of 2009. The underlying rate of growth may prove disappointing and unable to sustain strong, consistent improvement in labor market conditions as the impact of these factors wanes in the months ahead.

I truly hope our business community can continue this progress toward a better Oregon economy for all Oregonians. Time will tell!

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