Oregon Economic and Revenue Forecast, September 2016

OFFICE OF ECONOMIC ANALYSIS

Economic and Revenue Outlook: September 2016

September 14th, 2016 Oregon Office of Economic Analysis

Mark McMullen

Josh Lehner


Economic Update and Outlook

2


Oregon’s Job Market Continues to Impress

3


Nationwide Income Growth Slows

4


But Not in Oregon (Yet)

5


Manufacturing Weakness Spreading

6


Good Times for the American Consumer

7


Recessionary Fears Are Rising, But Remain Low For Now

8


Job Growth Remains Strong

9


Changing Workforce Demographics

10


Labor Market Getting Tight

11


Potent Mixture: Education, Polarization and Participation

12


Slowing Down Soon

13


Revenue Update

14


Wages Still Strong…

15


…but Overall Growth Slows

16

-15%

-10%

-5%

0%

5%

10%

15%

20%

Jan2015

Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan2016

Feb Mar Apr May June July Aug(E)

Sept(F)

Kicker Takes a Bite: Personal Income Tax Collections% change over year ago, 3 month moving sum


Corporate Taxes Turn Down

17

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Net Corporate Taxes ($ Ths, 12 month sum)


Revenue Outlook

18


2015-17 Forecast Evolution

19


2017-19 Forecast Evolution

20


How Long Will Bull Markets Persist?

21

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0

2

4

6

8

10

12

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

20

20

20

22

20

24

Stock Prices and Oregon Taxable Capital Gains

Sept 2016 Wilshire 5000 Stock PriceForecast (Right)

Sept 2016 Cap Gains Forecast ($ bil)


Lottery: Casino Impact Update

22


Sept 2016 Forecast Changes Relative to the June 2016 Outlook(millions of dollars)

2015-17 2017-19 2019-21 2021-23 2023-25

General Fund

Revenues -$1.3 -$56.2 -$135.4 -$32.3 $33.4

Other General Fund Changes

Beginning Balance $0.0 -$2.2 -$0.7 -$1.7 -$0.4

ORDF Transfer -$0.9 -$0.7 -$1.8 -$2.5 -$4.3

Expenditures $0.0 $0.0 $0.0 $0.0 $0.0

Sub-Total -$0.9 -$2.9 -$2.5 -$4.2 -$4.8

General Fund Ending Balance -$2.2 -$0.7 -$1.7 -$0.4 $0.4

Lottery Fund

Revenues $8.3 -$14.4 -$15.0 -$17.1 -$18.3

Other Lottery Changes

Beginning Balance $0.0 $5.6 $0.0 $0.0 $0.0

Total Available Resources $6.1 -$67.9 -$152.9 -$53.6 $10.3

Forecast Changes

23


2424

Forecast ChangesDifference from June Forecast, $ millions

6.1

-65.7

-152.2

-51.9

10.8

-$200

-$150

-$100

-$50

$0

$50

2015-17 2017-19 2019-21 2021-23 2023-25

Personal Corporate Lottery

Other Total


2525

Biennial Revenue Growth

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Personal Income Taxes Total Net Revenue

What Could Possibly Go Wrong?Potential 2017-19 General Fund Revenues*

No Recession

Slow Growth Rapid Growth Today July 1

2017

June 30

2019

$19.6B

$19.6B$19.9B$17.4B

Kicker Refunds Are Triggered Above Forecast,

but Below 2%

Kicker Threshold

Revenue ShortfallRevenue Losses

Potentially Known

Before Budgets

Are Written

$19.6B

*Two scenarios are omitted for simplicity:

1) No recession, but extremely weak growth leading to budget shortfall

2) A recession starting very late in the biennium following strong growth that triggers the kicker

Recession Begins

Forecast


27

Reserves

Effective Reserves ($ millions)

Jul

2016

End

2015-17

ESF $303.2 $382.9

RDF $372.8 $387.8

Reserves $676.0 $770.7

Ending

Balance $259.6 $259.6

Total $935.6 $1,030.4

% of GF 5.2% 5.7%


28

For More Information

Standard Contact:

155 Cottage Street NE

Salem, OR 97301

(503) 378-3405

[email protected]

www.oregon.gov/das/oea

Social Media:

www.OregonEconomicAnalysis.com

@OR_EconAnalysis

Oregon Economic and Revenue Forecast, September 2016

Economy & Finance