Over the past few years, Oregon has continued its expansion, exceeding the national average of growth in bellwether sectors such as construction, healthcare and technology. 2020 is predicted to have some shining light but also showing slowed growth in some of these key industries. How will the Central Oregon region be impacted?
National and State Data Point to Overall Market Stability
According to the State of Oregon Office of Economic Analysis’s 2020 Revenue and Economic Forecast (released December, 2019), the longest-running U.S. economic expansion marches on, and “recession is not yet seen in the data.” The forecast also notes that Oregon’s overall job picture is charting growth, albeit slower growth than in recent years, and strong income growth is also noted. Overall, the picture for Oregon is continued economic good health as read in this quote in the forecast: “Current economic conditions in Oregon have rarely been better.”(1)
Other indicators viewed by economists as reliable indicators include federal interest rates, which just last week were stated as staying stable in the near term, without increase. Oregon is aligned with the national outlook of the U.S. economy remaining in expansion, albeit with slower growth.(1)
Perhaps the most focused indicator of economic health per state is the unemployment rate. Oregon’s dipped to a low of four percent in 2019 and is predicted to remain unchanged. National economic models predict Oregon will add just over 25,000 jobs total in 2020.(2)
On the building side, national construction industry watcher Dodge Data and Analytics predicts total U.S. construction starts will slip to $776 billion in 2020, a decline of four percent from the 2019 estimated level of activity. Dodge finds economic growth is slowing but is not anticipated to contract this year. This is expected to ring true for both commercial and residential construction, on the national average.(3)
On our home turf, the 2020 state forecast for construction shows new residential — both single and multi-family housing — construction is continuing its upward trend and is expected to grow ten to 15 percent in coming years. The number of housing construction starts is expected to hit about 22,500 in 2020 and then climb to above 24,000 within a few years before slowing down again.(1)
Local construction industry employment in 2019 remained steady, with overall job growth slowing. Oregon workforce experts project in the decade 2017 to 2027, Oregon’s construction workforce will increase by almost 17,000 jobs.(4) Oregon’s construction sector employment in 2019 kept pace with the local transportation, warehousing and durable goods manufacturing sectors. Part of the projected slowing is due to indicators showing employment in these subsectors is already strong, leaving less margin for expansion. Finding qualified/skilled labor remains key in these local industries in our tight labor market.(1)
One of the most cited and dependable economic indicators is take-home pay and disposable income, because in the rise of consumerism, we watch and plan for how consumers will use the facilities we build. In 2018, Oregon’s median household income grew the second-fastest across all states. This now puts the typical Oregonian household’s income 2.4 percent higher than their national counterparts. This is the first time in more than 50 years that this is true.
Central Oregon Poised for Opportunity in the Built Sector
The U.S. Census in 2018 cited the Central Oregon region as the sixth fastest-growing in the United States. This can be a mixed blessing for any growth market. According to the Economic Development for Central Oregon organization, currently about half of Central Oregon’s population is in the labor pool, as the area is home to a large number of retirees along with growing families.(5)
The overall economy, both statewide and locally, looks to be prepared for the inevitable cycles of growth and contraction if any of the aforementioned indicators hold true. We continue to be bullish for this area and believe Central Oregon will continue with smart and robust development coming up in 2020 and beyond.
The educational sector remains a key development opportunity. Growth and expansion of the OSU-Cascades Campus and robust population growth in La Pine and Redmond, for example, are fueling the need for new and modernized K-12 school structures.
And like the past few years, healthcare continues its growth curve with new and ongoing expansion planned at St. Charles Medical Center in Bend, and a new community health center in Madras, in partnership with Mosaic Health and the Jefferson County Health Department. These two examples show the importance of working together as a community to deliver the right healthcare at the right time and in the most beneficial way.
High tech and bioscience are sectors that are strong in Central Oregon, as is the expanding presence of data centers that are on our radars with new centers being planned in Prineville.
And our goals of sustainability remain true along with our clients’ needs. We will continue looking to build for affordability, operational and cost efficiency and future facility needs with an eye to compliance in the use of durable and cleaner materials.
On balance, Central Oregon continues to offer a high quality of life with its smart economic and community development goals. We’re still bullish on this region.
Citations:
(1) State of Oregon Office of Economic Analysis, (pages 4-8)
(2) Kiplinger Economic Outlook for 2020 in all 50 states
(4) State of Oregon Employment Department
(5) 2019 Central Oregon Economic Profile
By: John Williamson, C.O. Mgr, Skanska USA Building; Cascade Business News on February 12, 2020