August 2018 Statewide Indicators, Media Updates, A Reminder To Register For This Year’s Forum

First: Final days to register for this year’s Oregon Economic Forum! You won’t want to miss our exciting lineup of speakers this year! For more information, click on link below.

15th Annual Oregon Economic Forum

Reaching for Economic Equity and Inclusion in the Second Gilded Age

October 17, 2018
Portland Waterfront Marriott
7:00–11:00 AM
Breakfast begins at 7:00 AM
Speakers begin at 7:45 AM

Keynote Speaker: Heather Boushey, Executive Director and Chief Economist, Washington Center for Equitable Growth.

Second: For more information on the national economic situation and the Federal Reserve, don’t forget to visit Tim Duy’s Fed Watch.

Third: Recent media:

In Boom Times or Bad, Know the Signs – Register Guard

Simply put, “recessions don’t last forever,” says Tim Duy, University of Oregon economics professor of practice and senior director of the Oregon Economic Forum. Even the Great Recession of 2008. “Eventually, the natural forces of economic growth return. Markets adjust to allow for growth to occur again,” Duy says. “That happens as a combination of natural factors and policies, such as very, very low interest rates and fiscal stimulus. So, we hit the bottom and the natural forces that foster stronger economic growth over time come into effect.”

Trump’s trade wars threaten to disrupt Fed outlook for economy – Politico

“You could imagine a scenario where we’re all going along just fine … but then suddenly there’s this tariff, … and companies that were holding off on price increases see this as an opportunity to raise prices, and consumers just kind of accept it,” said Tim Duy, an economics professor at the University of Oregon.

“Then [the Fed] is going to say, ‘Wait a second, maybe we do need to be more aggressive,’” he added.

Duy said the amount of trade affected so far is a small portion of economic activity, and it might not have a huge impact on inflation — particularly since not all the increased costs borne by producers will be passed along to consumers.

Regardless, “it’s a whole bunch of noise” that the Fed will have to sort through, Duy said.

Would saving Lehman have saved us from the Great Recession? – Washington Post

This wouldn’t have unfrozen credit markets, but it would have kept things on the right side of apocalyptic. Although even then “some of the big mortgage lenders and regional banks that were more directly affected by the mortgage meltdown likely wouldn’t have survived,” University of Oregon economist Tim Duy told me. Think Washington Mutual and Wachovia. That notwithstanding, the idea is that the rest of the banks would have gotten the time they needed to earn their way out of their problems without needing government help. That might sound overly optimistic, but it might have been feasible. While the banks were in a lot of trouble, it wasn’t nearly as much as the post-Lehman “fire sale dynamic,” as Geithner put it, made them look. Avoiding the panic might have let us avoid the bailouts.

Fed’s light touch on interest rates may require a firmer hand – Financial Times

Tim Duy, an economics professor at the University of Oregon, said this messaging is being interpreted “fairly dovishly” by markets, even though the robust economic data ought to be pushing the Fed in a fairly hawkish direction.

“The economy is in the midst of a strong cyclical rebound, with a fiscal stimulus, which creates enormous economic momentum. The risk is that eventually investors suddenly wake up and realise the Fed is going to have to clamp down with much tighter policy. That message doesn’t seem to be getting through — maybe it is because Powell is not being clear enough,” said Mr Duy.

Fourth: Below is the University of Oregon State of Oregon Economic Indicators for August 2018. Special thanks to our sponsor KeyBank! Please be sure to download the full report – now expanded to include additional charts of the economic measures used to construct the UO Index.

Link to full report (with charts) here.

The Oregon Measure of Economic Activity fell to 0.51 in August from a downwardly revised July reading of 0.74. Highlights of this month’s report include:

  • The moving average measure, which smooths out the volatility, stood at 0.83, well above average (“zero” indicates average growth over the 1990–present period).
  • The manufacturing sector made a negative contribution, with hours worked again a particularly weak spot (the employment component was also negative but that tends to be more volatile).
  • Although job growth slowed, the unemployment rate, however, reached a record low of 3.8 percent in August, and low initial unemployment claims, a forward-looking indicator, suggest job growth will rebound in the months ahead.
  • The University of Oregon Index of Economic Indicators held steady in August. Underlying data was mixed.
  • Employment services payrolls look to be normalizing after experiencing a steep run-up and subsequent decline over the past year. Building permits, smoothed, declined again as the market adjusts to a slower pace of multi-family construction.
  • Manufacturing average weekly hours worked fell again. Traditionally this tends to be a very cyclical indicator, but in this instance the indicator is deviating from national manufacturing numbers which reveal a strong pace of activity. Moreover, the declines appear to be concentrated among production employees. This may reflect new workweek limitations for Oregon manufacturing firms and as such would not indicate a cyclical shift in the economy.

Together, these indicators suggest ongoing growth in Oregon at an above average pace of activity. Recent declines in the UO Index are not sufficient to raise recession concerns.

Media Contacts:
Tim Duy – 541.346.4660 (w)