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Entries in economy (5)


News from "Bonny" Scotland

I came to Scotland to get away from my concerns for a time, but reading the newspaper — and newspapers over here seem more popular than in the U.S. — tends to limit relaxation.  The headlines in Scotland could easily be on the newspaper stand in Oregon, too. Perhaps it is possible to take some solace in knowing that every country has problems.

Judging by the following, not everything is bonny here.

CFM Partner Dave Fiskum was reading familiar newspaper headlines in Scotland when he could have been golfing at St. Andrews.

"Britain facing worst wave of strikes for a generation": That was the headline in The Herald on Wednesday, September 14, followed by this summary:

"Union leaders warned last night Britain is facing the biggest wave of industrial action for a generation that could involve thousands of Scottish public service workers.  Schools, hospitals and other services will be hit by the dispute this winter, with an announcement on coordinated strike action expected to be made today."

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Will Oregon's Economic Slump End?

Oregon, like the rest of the country, is stuck with a stubbornly slow economic growth rate, said state economists during August's revenue forecast, and it's behind the national curve for recovery. But there are some bright spots that hint at an end to the slump.

Growing slowly

Oregon's unemployment rate by region, July 2011 (Office of Economic Analysis)Oregon experienced its third straight quarter of job growth, the longest growth streak since 2007. The bad news is the rate of growth is tiny – just 0.7 percent in the second quarter. Normal job growth is almost twice that rate.

The bad economy has caught up with the public sector, which employs around 18 percent of Oregon's workforce. According to the Office of Economic Analysis, budget shortfalls in the last few years are now converting to layoffs, especially in local government and education. That's  put a drag on overall job growth in the near term.

The other major factor affecting job growth is the continuing failure of the housing market, according to economists.

Other economic factors help to paint a bleak picture. In the first half of 2011, estimated GDP growth was 0.8 percent.  Personal income growth in June was only 0.1 percent and consumer spending fell 0.2 percent.  Chief Economist Mark McMullen told legislators Oregon's economy could suffer as consumer pessimism from the East Coast moves westward.

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Budget Cuts Present Challenge to New Governor

Consider what Washington Governor Christine Gregoire announced last week:

Saying Washington's ballooning budget deficit means "we have all run out of time,"Gov. Chris Gregoire on Tuesday proposed eliminating the state's health insurance for the poor and needy, ending the state food assistance, no longer funding programs for gifted students and delaying grant payments that help low-income students go to college. Last week, Gregoire asked to reopen the state's current contract with union workers in hopes of winning concessions. "The financial situation for our state is significant and will continue to require all of us to work together, Gregoire said in a statement."

Could this be a harbinger of things to come in Oregon?

The answer is maybe.

Much depends on what Governor-Elect John Kitzhaber does as he puts the next biennial budget together. He has until February 1, 2011 to get it done and transmit it officially to the legislature. He faces a projected $3.5 billion deficit on a general fund base of $16 billion for 2011-13.

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Tim Duy Says Economic Situation Won't Help New Governor Make Friends

The next Oregon governor needs to keep in mind that there isn't an easy way out of this budget mess, said Tim Duy, an economist from the University of Oregon, at the October 21 Oregon Economic Forum. If Oregon makes bad budget decisions, he said it could become the next California.

The budget cuts the legislature makes now should be viewed as permanent cuts, Duy said. Governor Ted Kulongoski's Reset Cabinet predicted a decade of "recession," or very slow growth, when its report came out earlier this year. Duy agreed, and said the legislature likely won't be able to refund programs until 2020. Balanced budgets, Duy said, will require a hard look at state employee compensation.

Oregon could experience an "echo recession" in 2011-13, according to Duy. While corporations and households are finished making adjustments (lower output and spending), the efforts by the federal government may not have been momentous enough to pull the economy out of the doldrums permanently.

The recession ended four quarters ago, when the economy stopped free-falling and started growing again. But per-quarter growth has been miniscule, so it doesn't really feel like a recovery, said Duy. The economy is still far below its 2007 levels.

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Revenue Forecasts Show Less State Income

Late last month, state economists confessed to Oregon's legislature that their predictions about the amount of tax revenue collected by the state were too optimistic, and in fact, the state would collect about $377 million less than they had forecast in June.

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