Salem Economic Outlook November 2012 Tim Duy, PHD Prepared for the Salem City Council November 7, 2012
Roadmap US Economic Update Slow and steady Positives: Housing/monetary policy Negatives: Rest of world/fiscal policy A Quick Look at Oregon Salem Area Business Index Forecasts for Oregon Job Growth Baseline State-like assumptions Fiscal Cliff Salem Area Job Forecasts Revenue Implications
Slow and Steady
Still Well Below Trend
Slow and Steady
Housing on the Mend - Finally
Housing on the Mend - Finally
Housing on the Mend - Finally
Manufacturing Hits Headwind
International Drag
Austerity Already
Monetary Boost
Nothing to See Here
Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Oregon On the Upswing UO Index of Economic Indicators Blue: UO Index, 1997=100, Left Axis Gray: Probability of Oregon Recession, Right Axis 101 99 97 95 93 91 89 87 85 83 100% 80% 60% 40% 20% 0%
Mar-90 Dec-90 Sep-91 Jun-92 Mar-93 Dec-93 Sep-94 Jun-95 Mar-96 Dec-96 Sep-97 Jun-98 Mar-99 Dec-99 Sep-00 Jun-01 Mar-02 Dec-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jun-07 Mar-08 Dec-08 Sep-09 Jun-10 Mar-11 Dec-11 Sep-12 Not the Fastest Growth Oregon Measure of Economic Activity Black: Three Month Moving Average, Left Axis Gray: Real Oregon Personal Income less Transfer Payments, % Change y-o-y, Right Axis 2 1 0-1 -2-3 -4-5 8% 6% 4% 2% 0% -2% -4% -6% -8% -10%
Business Index Components
Business Index Components
Business Index Components M a r i o n C o u n t y S o l i d W a s t e 6 4 0 0 0 T o n s 6200 0 6000 0 5800 0 5600 0 5400 0 5200 0 5000 0 4800 0 4600 0 2005 2006 2007 2008 2009 2010 2011 2012 S a l e m E c o n o m i c O u t l o o k N o v e m b e r 2 0 1 2
Business Index Components 2 4 0 0 0 0 0 S a l e m L o d g i n g R e v e n u e D o l l a r s 2 3 0 0 0 0 0 2 2 0 0 0 0 0 2 1 0 0 0 0 0 2 0 0 0 0 0 0 1 9 0 0 0 0 0 1 8 0 0 0 0 0 1 7 0 0 0 0 0 1 6 0 0 0 0 0 S a l e m E c o n o m i c O u t l o o k N o v e m b e r 2 0 1 2 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2
Business Index Components
Business Index Components U n i v e r s i t y o f O r e g o n I n d e x o f E c o n o m i c I n d i c a t o r s 1 0 2. 5 I n d e x 1 9 9 7 = 1 0 0 1 0 0. 0 9 7. 5 9 5. 0 9 2. 5 9 0. 0 8 7. 5 8 5. 0 S a l e m E c o n o m i c O u t l o o k N o v e m b e r 2 0 1 2 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2
Business Index Components S a l e m M S A N o n f a r m P a y r o l l s 1 5 4 T h o u s a n d s E m p l o y e e s 152 150 148 146 144 142 140 1 3 8 S a l e m E c o n o m i c O u t l o o k N o v e m b e r 2 0 1 2 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2
Salem Reaches a Bottom S a l e m A r e a B u s i n e s s I n d e x 1 0 2 I n d e x 1 9 9 7 = 1 0 0 1 0 0 9 8 9 6 9 4 9 2 9 0 8 8 8 6 S a l e m E c o n o m i c O u t l o o k N o v e m b e r 2 0 1 2 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2
Aug-99 May-00 Feb-01 Nov-01 Aug-02 May-03 Feb-04 Nov-04 Aug-05 May-06 Feb-07 Nov-07 Aug-08 May-09 Feb-10 Nov-10 Aug-11 May-12 Still, Very Low Growth Salem Index of Economic Activity Six-month moving average in black 2 1.5 1 0.5 0-0.5-1 -1.5-2 -2.5-3
Oregon Outlook
Many Potential Paths
US Growth Forecasts
Oregon Forecasts
Oregon Forecasts
Oregon Forecasts 1 0 0 0 0 O r e g o n G e n e r a l F u n d R e v e n u e s P e r s o n a l a n d C o r p o r a t e I n c o m e T a x, $ M i l l i o n s 9 0 0 0 8 0 0 0 7 0 0 0 6 0 0 0 5 0 0 0 4 0 0 0 3 0 0 0 2 0 0 0 1 0 0 0 1 9 9 0 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 0 0 0 2 0 0 2 2 0 0 4 2 0 0 6 2 0 0 8 2 0 1 0 2 0 1 2 2 0 1 4 2 0 1 6 2 0 1 8 2 0 2 0 A u g u s t 2 0 1 2 E c o n o m i c F o r e c a s t S a l e m E c o n o m i c O u t l o o k N o v e m b e r 2 0 1 2
Oregon Forecasts
Fiscal Cliff?
Very Different Outcome
Salem Lagging Or Not?
Compare to Portland
Adjusted Nonfarm Payroll Data
Adjusted Nonfarm Payroll Data
Slow Revenue Growth Cumulative Shortfall: $83 million! Salem Total Operating Revenue Actual and Projected (Blue) and Trend FY2005 to FY 1014 (Red) $130,000,000 $120,000,000 $110,000,000 2001-2004 4.5% $100,000,000 $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 2001-2002 7.5% 2003-2004 1.4% 2005-2008 5% 09-10: $93.7 mil. 10-11: $93.5 mil. 11-12: $96.9 mil. 12-13: $96.7 mil. 13-14: $97.8 mil. 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999
Jan-05 Jun-05 Nov-05 Apr-06 Sep-06 Feb-07 Jul-07 Dec-07 May-08 Oct-08 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Slow Revenue Growth Salem Residential Building Permits, New SFD/DPLX, Value Actual (Blue) and Average Jan. 05 to Jun. 07 (Red) $25,000,000 $20,000,000 $15,000,000 $10,000,000 Lost Taxable Value: $567 million $5,000,000 $0