On Wednesday, the Office of Economic Analysis presented the fifth economic and revenue forecast for the biennium before a joint meeting of the Senate and House Finance and Revenue Committees.  The economic outlook looks largely the same as the previous forecast.  Resilience in the economy continues despite multiple headwinds – energy, tariffs, and consumer confidence – to name a few.  Despite negative views of the economy, the GDP is showing stability and possible acceleration.  The pace of hiring is accelerating and unemployment is largely level.   

Interestingly, Oregon’s retail numbers show the state’s citizens are still shopping.  We appear to have survived the worst of the energy shock.  As a result, the chance of entering a recession is declining.  However, inflation is still stubbornly high and may force increasing short-term loan interest rates. 

Some of the resilience we have seen can be attributed to lower tariffs following the Supreme Court ruling. In addition, tariff refunds issued to large corporations such as Nike and Intel have helped offset increased energy costs resulting from the war in Iran. 

Corporate profits are up 9% in the 2nd quarter and up 23% overall for the year.   

Oregon economic activity measured through GDP is growing but still about one-percent behind the national average.  Goods-related sectors like construction and manufacturing are doing worse than a year ago whereas services are doing better than a year ago.    

Energy inflation is running at 18% and has been a major contributor to overall inflation which is cascading into other sectors.  The Fed's inflation target is 2%, so there is pressure to increase interest rates to combat inflation.  Inflation has been rising for the last five years and as a result, consumers are being more selective in their purchases - rather than buying steak they are buying ground beef, for example. 

Personal income tax revenue is up $10.6 million (0.0%) from the Close of Session (COS) forecast and is up $137.8 million from the previous forecast.  Corporate tax revenue is up $61.3 million (1.8%) from the COS and is down $96 million from the previous forecast.  General Fund gross revenue is up $193.9 million (0.5%) from the COS and is up $40 million from the previous forecast.  Net General Fund and Lottery resources are up $89.0 million (0.2%) from the COS and is up $59.1 million from the previous forecast.  Lottery resources are down $27.3 from the COS and up $3.7 million from the previous forecast. 

There is no personal kicker projected for the 2027-2029 biennium.  And no corporate kicker is projected at this time.