Economy inches up.
Oregon's recession most likely ended in August - co inciding with the end of the national recession, University of Oregon economist Tim Duy said Wednesday.
He made that determination based on movements in an economic barometer he created to measure activity in Oregon.
Duy's UO Index of Economic Indicators climbed in October for the third consecutive month, driven largely by a jump in building permits and a slight rise in consumer confidence.
The index increased from 84.5 in September to 85 in October, the latest month available.
The index forecasts economic conditions in coming months, based on factors such as Oregon unemployment, building permits and national consumer confidence. It uses 1997 as the base year of 100; the higher the number the better the outlook.
Despite the trend up, "I think that you still have questions about the strength and durability of this recovery," Duy said.
"The general public does not really seem to believe that the recession is over, and the business community doesn't believe that the recession is over.
"The stability is rather tenuous. Even though you're stabilizing, you're stabilizing at what people feel is a low level of activity."
One looming question is how much of the economic improvement is simply a temporary result of the federal stimulus program.
The Congressional Budget Office recently estimated that federal fiscal stimulus accounted for national growth of between 1.3 and 3.2 percent in the third quarter, Duy said. In other words, he said, anywhere from half to all of the 2.8 percent national growth recorded in the third quarter could be attributable to the stimulus package.
"I personally think a significant portion of the bounce is attributable to the federal stimulus," from both federal government spending and from low interest rates, he said.
Caution should be used when examining other numbers in the index, such as the housing permit figures, Duy said.
"You're coming off some of these (historically) low numbers for housing permits," so a small rebound can result in a large percentage increase, he said.
"I'm not bothered by that, but I am bothered if people get the expectation that suddenly housing markets are going to reverse courses and lead us out of where we've come," Duy said.
In Lane County, home sales numbers are up, "but boy, they're just not that exciting relative to peoples' expectations of how exciting they should be," Duy said.
Mike Gansen, owner of Gansen Construction and past president of the Oregon Home Builders Association, thinks Duy is right to be circumspect about the latest housing permit numbers.
"We just haven't been doing many homes," he said. "If (permits) are up, it's not because of us."
He said he's working on a couple of starter homes in Sweet Home and is getting ready to break ground on a couple more in Junction City.
Probably the past five homes he has built in those communities were for buyers taking advantage of the first-time home buyers' tax credit, a high-profile element in the federal stimulus program, he said.
Duy said predictions of a "jobless recovery" have proven true.
"I'm not expecting any significant improvement in the job market until later next year - maybe the second half at best. And even then, I'm cautious," he said. "Still too many memories of the last recession weighing in my head and that long two-year period before you had significant job activity. That is a more likely scenario than the rapid bounce-back scenario."
Duy predicts that the waves of massive Lane County layoffs probably are over.
"The obvious suspects have gone through the wringer," he said.
The computer chip industry, wood products and the RV manufacturing industry all have been hammered by the recession.
However, a string of smaller, 20- to 30-person firms could close early next year, he said.
Some businesses - especially retailers, hanging on through this holiday shopping season, could decide to throw in the towel early next year, Duy said.
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|Title Annotation:||Business; A UO index climbs for the third straight month, but questions of the recovery's strength remain|
|Publication:||The Register-Guard (Eugene, OR)|
|Date:||Dec 3, 2009|
|Previous Article:||BRIEFLY METRO.|
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