Economic report released by PSU research center predicts possible recession
A new economic report released by Portland State states the risk of a national recession has increased, but a sharp economic decline is not expected in the near future.
The study also found Portland is subject to the same slowing of economic growth due to a large and increasing housing gap and slowed manufacturing.
The study, titled “Portland MSA Economic and Population Outlook,” was conducted by PSU’s Northwest Economic Research Center (NERC), a research group committed to providing unbiased economic analysis for the private, nonprofit and public sectors of Oregon and Washington, according to their webpage.
The study looked at multiple aspects of the economy, including employment, wages, housing and interest rates. Ultimately, the report concluded that “signs point to a heightened risk of recession in the next couple of years.”
“We don’t think there will be a recession in the next year, but risks are increasing,” Peter Hulseman, senior economist with PSU’s NERC, said in a press release.
“While there are many elements (national and international) that could indicate trouble on the horizon, at this time the underlying data do not support fears of an imminent recession,” the report states.
The study states the United States has been experiencing its largest economic expansion in its history over the last 121 months, but that signs are beginning to point that growth may begin to slow.
“NERC isn’t predicting an economic decline,” Hulseman stated in an email. “We are forecasting declining growth, but not a decline.”
Warning signs on the national level of a potential recession found in the study include costly housing, manufacturing cutbacks, slowed consumer spending and trade wars.
Hulseman emphasized that none of these individual signs indicate that a recession is forthcoming, but that people who react to signs of a slowing economy may exacerbate the problem.
The study also found that Portland is experiencing many of the same things that may signify signs of a recession on the national level, such as slowed manufacturing and a decline in overall hours worked. But, according to the report, Portland’s job market is steady.
The Portland housing gap and its effects on the economy was also examined in the study.
“The supply of affordable homes is not only dwindling throughout Portland, but also across Oregon and the broader United States,” the report says. “At the state level there are only 28 affordable and available homes for every 100 low-income renters, below the already morose national figure of 37.”
In a press release, Hulseman said the report highlights the fact that simply building more housing units or affordable housing won’t fix Portland’s housing problem. “It’s not that simple,” he said.
According to Hulseman, Portland has a better chance of fixing its housing gap than income inequality.
“Filling this [housing gap] will require concerted efforts from both private and public sectors,” the report states. “New [housing] is an important piece of the affordability puzzle (especially in the long run) but requires redistribution in the short run in order to alleviate the [uneasiness] currently felt by Portland residents.”
According to Hulseman, universities tend to fair pretty well during recessions.
“A general point about how colleges fair during downturns: better than you would expect,” Hulseman said. “A lot of people who lose jobs go back to school for a number of reasons, such as to add job skills and because they have more free time. So the college might do relatively well, but students will likely find it harder to get jobs and all of the problems associated with that.”
While the report didn’t look at how factors such as tuition, student housing and food insecurity may be affected by slowing economic growth, the findings on both the local and national level indicate that college students could likely be affected.
According to the report, declining economic growth is likely but not inevitable.
“There is no doubt that the risks for a recession have heightened,” the report states, but the researchers conclude, “At this time, we do not see a particular imbalance or speculative bubble occurring in the economy as has preceded other recessions.”
The researchers state in the report that they will remain vigilant in looking for signs of a serious recession.