Uncertainty, other cliffs ahead could hit national economy
The slowly growing national economy avoided a fresh crisis when Congress averted the fiscal cliff at the last minute. But the recovery in Oregon and the United States facesnew challenges to stay on track, according to local economist John Mitchell.
The worst that could have happened at the start of January didnt happen, but theres still much uncertainty ahead, Mitchell, a principal at M&H Economics Consulting, told members of the Portland Business Alliance during his annual economic preview on Wednesday morning.
During a fast-paced and frequently amusing presentation, the good-natured Mitchell rushed through reams of economic data that showed the U.S. economy began recovering in June 2009, with the economies in Portland and Oregon picking up steam a short time later.
Mitchell warned that the world is still an uncertain place, however, with unexpected developments on a regular basis.
Look at it this way Twinkies are gone and the Lone Ranger is making a comeback, Mitchell said of the bakery bankruptcy and an upcoming big screen western.
According to Mitchell, the Federal Reserve expects the U.S. economy to grow between 2.3 percent and 3 percent in 2013, and between 3 percent and 3.5 percent by 2015.
Thats slow, but at least were moving in the right direction, Mitchell said.
But, Mitchell noted, the recovery still has a long way to go before it reaches pre-recession levels.
The bad news is, we now have 4 million fewer jobs than we did in January 2008. The good news is, we have 5 million more jobs than we had in February 2010, Mitchell said.
More cliffs ahead
Turning to Oregon, Mitchell noted the Brookings Institute says the state has the 21st fastest growing job rate in the county. Its recovery has been aided by a rebounding housing market and uptick in the Portland metropolitan area.
The U.S. Bureau of Labor Statistics reported Tuesday that Washington County wages are growing at 8.5 percent.
The housing market has been late coming to the party. Interest rates are at all time lows and affordability is soaring because housing prices fell so much, but people have to still be slow to begin buying again, Mitchell said.
Despite that, Mitchell pointed to statistics that show housing construction has increased for six consecutive quarters. Residential construction permits in Portland increased 44 percent from 2009 through November 2012.
Mitchell warned that the recovery is still at risk, however. He noted that Congress faces more challenges in coming months, including a vote to raise the debt ceiling in March. And the automatic across-the-board federal budget cuts known as sequestration were only postponed for two months, Mitchell noted.
Congress avoided one cliff but there are other cliffs ahead, Mitchell said.
Mitchell also pointed out that no one knows what the 2013 Oregon Legislature might do with personal and business taxes. Lawmakers will meet in Salem next week to organize themselves, then reconvene in February and begin taking up legislation.