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SLOW, STEADY, FRAGILE

SLOW, STEADY, FRAGILE

Register-Guard, The (Eugene, OR) - Thursday, March 21, 2013
Author: Sherri Buri McDonald The Register-Guard
The Register-Guard Board of Economists is predicting slow and steady improvement in the national and local economies this year, but with a wide range of risks, including the possibility of falling back into recession.

The five-member panel offered those predictions and more at the 19th annual Economic Forecast event, which attracted 625 people to the Hilton Eugene & Conference Center on Wednesday. The event is produced by the Eugene Area Chamber of Commerce and The Register-Guard. 

One audience member, Carole Knapel of KPFF Consulting Engineers, said she tries to attend the event every year because "it helps us understand what the market is out there and where we might be looking for potential projects." 

She said her take-away this year is "there's potential for improvement, but we've got a ways to go before we're in really good shape." 

Most of the economists said they expected continued slow growth in the first half of the year, with the possibility of some strengthening toward the end of the year. 

They also said they see a stronger housing market in 2013. 

"Housing is no longer a drag on the economic recovery for the nation or for Oregon," said Tom Potiowsky, chair of economics at Portland State University and former state economist. 

Single-family housing permits in Lane County are predicted to rise 25.3 percent, and the average home sales price in the county is expected to be $206,726, up 2.9 percent from 2012, according to the board's consensus forecast. 

But, even with the expected increase, the number of permits is still low compared to levels before the recession. The 519 permits forecast for Lane County this year is well below the almost 750 issued in 2008. 

Lake Oswego-based economist Bill Conerly said it will take a surge in population growth to significantly increase housing starts in Lane County. 

Jobs, too, are ticking up in Lane County, although still by tiny increments. 

Brian Rooney, regional economist with the state Employment Department, said year over year job growth in Lane County stands at 1 percent. 

The board's consensus forecast expects jobs to reach 142,990 in the county in 2013, up 1.7 percent from the estimated level for 2012. 

A bright spot in the local economy is the flurry of activity in Eugene's downtown, including the opening of Lane Community College's downtown campus and student housing, the Capstone student housing project, and Sykes Enterprises' plans to open a call center downtown, Rooney said. Sykes plans to employ up to 400 people in the next 18 months at the Eugene center. 

The economists also noted that there are plenty of risks to worry about, from Europe's continued financial problems, to inflation heating up in China that might prompt policies to try to slow growth in that country. That matters to Oregon because China is the No. 1 export destination for Oregon goods and services, Potiowsky said. 

The board generally agreed that the automatic federal spending cuts, known as sequestration, will have a relatively small negative impact on Oregon. 

"Overall you're only looking at 0.5 percent to 0.6 percent off GDP (gross domestic product) and Oregon having a smaller share," Potiowsky­ said. 

Total federal spending is $3.6 trillion, added Portland economist John Mitchell. "We're talking $85 billion (in sequestration cuts.) To some it's the end of civilization as we know it. To others it's a rounding error." 

As for business owners and managers sifting through all this information and trying to decide what to do at such an uncertain time, Conerly said he recommends economic contingency planning. That entails figuring out what to do if the economy weakens significantly and what to do if the economy grows faster than predicted, he said. 

"How can we be ready for growth if it appears, and at the same time make sure we don't get clobbered (if there's another recession)," Conerly said. He puts the risk of another recession at 20 percent. 

The event also included a discussion by University of Oregon President Michael Gottfredson and Oregon State University President Edward Ray about the roles their institutions play in economic development, including plans for a Regional Accelerator and Innovation Network, or RAIN, to encourage technology-based start-ups. Ray estimated that if RAIN moves forward it could generate 135 ventures over a decade, triple the normal expected rate. 

The Eugene Area Chamber of Commerce, in partnership with the Eugene Water & Electric Board, also released the initial results of the first comprehensive analysis of the local business climate in more than a decade. 

Among the findings: 72 percent of the businesses surveyed rated doing business in Eugene as good to fair. More than half (57 percent) of respondents expect an increase in gross revenues this year, 43 percent of them plan to add a new product or service this year, and one in five said they plan a significant capital investment in the next 12 months.
Section: Business
Page: 1A
Index Terms: PERCENT, OREGON, COUNTY, ECONOMIC, EUGENE, STATE, BOARD, CONERLY, ECONOMISTS, FORECAST
Record Number: 22220529
Copyright (c) 2013, The Register-Guard, Eugene, Ore.