oregon economic and revenue forecast, december 2017
TRANSCRIPT
December 2017 Economic & Revenue
Outlook
November 29th, 2017 Oregon Office of Economic Analysis
Mark McMullen
Josh Lehner
Economic Update
Oregon Office of
Economic Analysis3
Economy Still Expanding…
Oregon Office of
Economic Analysis4
…Reaching All Corners
Oregon Office of
Economic Analysis5
Every County Added Population in 2017
Risks
Oregon Office of
Economic Analysis7
Few Warning Signs
Improving OILI
Slowing Air Freight
Not Improving Consumer Sentiment
Housing Permits
UO Index Initial Claims
Capital Good Orders Manufacturing PMI
Consumer Sentiment New Incorporations
Housing Permits Oregon Dollar Index
Initial Claims Semiconductor Bill.
Manufacturing Hrs Withholding
Weight Distance Tax Help Wanted Ads
Interest Rate Spread Industrial Production
Employment Services
Individual Indicators
Oregon Office of
Economic Analysis8
Population Forecast Changes
Oregon Office of
Economic Analysis9
•Solid data lags the real world
•Channels of Potential Wildfire Impact:•Short-Term
• Small Business Cash Flow
• Direct Employment
• Transportation Disruptions
•Long-Term• Lost Timberland or Recreational Areas
• Borrowing Costs
• Business or Population Growth
Wildfires: A Preliminary Economic Assessment
Oregon Office of
Economic Analysis10
Investors Are Not Scared Off Yet
Oregon Office of
Economic Analysis11
Yellowstone Mt. Saint Helens• Eruption turned into
tourist attraction•Concern that “footloose”
industries not reliant upon local natural resources would not invest moving forward. Their corporate decisions tied to quality of life, clean environment, and abundant recreational activities
Back to the Future
Oregon Office of
Economic Analysis12
Federal Tax Reform
Sources: Office of Economic Analysis,IRS, Oregon Department of Revenue
Oregon Office of
Economic Analysis13
Federal Tax Reform
Revenue Update and Outlook
Oregon Office of
Economic Analysis15
Revenues Still Growing
Oregon Office of
Economic Analysis16
Stable Outlook for BI2017-19
Oregon Office of
Economic Analysis17
General Fund Forecast Summary
Positive Factor
Negative Factor
CorporateExcise Taxes
Personal Income Taxes
Estate Taxes
Lottery
(Millions)
2017 COS
Forecast
September 2017
Forecast
December 2017
Forecast
Change from
Prior Forecast
Change from
COS Forecast
Structural Revenues
Personal Income Tax $17,147.4 $17,121.5 $17,118.5 -$3.0 -$28.9
Corporate Income Tax $1,077.0 $1,045.4 $1,078.0 $32.5 $1.0
All Other Revenues $1,327.6 $1,325.1 $1,334.3 $9.2 $6.8
Gross GF Revenues $19,551.9 $19,492.1 $19,530.8 $38.8 -$21.1
Offsets and Transfers -$75.5 -$71.8 -$73.9 -$2.1 $1.5
Administrative Actions1
-$21.5 -$21.5 -$21.5 $0.0 $0.0
Legislative Actions -$180.1 -$180.1 -$180.1 $0.0 $0.0
Net Available Resources $20,055.7 $20,094.3 $20,130.9 $36.6 $75.2
Confidence Intervals
67% Confidence +/- 7.1% $1,381.5
95% Confidence +/- 14.1% $2,763.1
1 Reflects cost of cashflow management actions, exclusive of internal borrowing.
2017-19 General Fund Forecast Summary
$18.15B to $20.91B
$16.77B to $22.29B
Table R.1
Oregon Office of
Economic Analysis18
Forecast ChangesDifference from September Forecast, $ millions
1818
-3.0
96.5
28.0
4.7
32.5
57.775.8
115.1
10.84.6 6.9 7.4
47.4
160.6
108.3
123.7
-$50
$0
$50
$100
$150
$200
2017-19 2019-21 2021-23 2023-25
Personal Corporate Lottery Other Total
Oregon Office of
Economic Analysis19
Biennial Revenue Growth
1919
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Personal Income Taxes Total Net Revenue
Oregon Office of
Economic Analysis20
Reserves
Oregon Office of
Economic Analysis21
Retirements Hit Close to Home
Oregon Office of
Economic Analysis22
How’s Your Earned Kicker Average?
Sweet Spot / EKA / Median Error / Recessions
Chang Sohn 0 / .500 / 9.1% / 1
Ann Hanus 0 / .833 / 6.0% / 1
Paul Warner 1 / .700 / 2.1% / 0
Tom Potiowsky 0 / .375 / 10.1% / 1
Dae Baek 0 / .000 / 9.8% / 1
Mark McMullen 1 / .667 / 3.2% / 0
OEA History 2 / .583 / 5.1% / 4
Sweet Spot: Biennial General Fund Forecast lands 0-2% above COS
EKA: Earned Kicker Average (share of COS resulting in kicker, PIT and CORP)
Median Error: Median absolute biennial General Fund forecast error
Source: Oregon Office of Economic Analysis
State Economist Statistics
Oregon Office of
Economic Analysis23
•“The key factor fueling growth in the state continues to be an influx of new residents.”
•“Oregon’s relatively strong performance is expected to continue despite the sharp decline in the timber industry. The geographic distribution of the timber industry means that many portions of the state will continue to feel the impact of the recession much more severely than the statewide average.”
Paul’s Sweet Spot ForecastMay 1991
Oregon Office of
Economic Analysis24
Nobody Is Perfect
December 1998: “Recovery in the semiconductor industry. Excess capacity in the semiconductor industry should begin to ease by 1999. A resumption in OR’s high tech manufacturing sector is expected to follow. Announced long-term investment plans by major companies are expected to be carried out during the 2000 to 2005 period. New investment from suppliers to the industry is also expected.”
December 1998: “Rising commodity prices. The slump in agriculture and natural resource prices is expected to be turning around by 2000. This will spur higher income and job growth for Oregon’s large agriculture and natural resource sectors.”
June 1990: “A key development in April was the release of the proposed Conservation Strategy for the Protection of the Spotted Owl….The current forecast assumes that total timber harvest will decline by 15% between 1989 and 1993.”
Oregon Office of
Economic Analysis25
Tom’s “Ideal Forecast” vs His Best Forecast
Oregon Office of
Economic Analysis26
Contact
(503) 378-3455
(503) 378-4052
www.OregonEconomicAnalysis.com
@OR_EconAnalysis