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Oregon Anxiety: Jobs, housing, goods all decline

September 10, 2010

By Tim Duy,
Oregon Economic Forum

sponsor, KeyBank.

The University of Oregon Index of Economic Indicators™ fell 2 percent to 86.4 (1997=100) from a revised June figure of 88.1. Compared to six months ago, the UO Index declined 4.7 percent (annualized), and more than half the components have declined over the past six months. In the past, such declines have foreshadowed a decline in nonfarm payrolls.

Highlights of the report include:

– Initial unemployment claims rose, crossing the 10,000 mark for the first time since January. Claims – already elevated – have risen slowly since March, and while claims remain well below the highs of late 2008 and early 2009, the upward drift is a discouraging indicator of persistent economic weakness.

– Residential building permits (smoothed) fell sharply in July, reverting to the lowest level since September 2009. Housing markets are once again struggling following the burst of activity induced by the now expired home purchase tax credit.

– New orders for nondefense nonaircraft capital goods fell sharply in July, suggesting that the pace of the manufacturing recovery is waning. This can be a volatile indicator, and it is premature to declare that the general upward trend of recent months is over. Still, such a sharp decline bears careful attention, especially if not at least partially reversed next month.

The interest rate spread between 10-Year Treasury Bonds and the Federal Funds rate dropped sharply for a third month as market participants again reassessed prospects for growth in the second half of 2010, concluding that previous forecasts would prove to be optimistic.

– The UO Index is currently following a pattern similar to that in the wake of the 2001 recession – a temporary improvement followed by renewed weakness, albeit of a lesser degree of the initial decline in nonfarm payrolls. Unless reversed quickly in the next month, recent behavior of the UO Index is consistent with renewed economic weakness again emerging in the next three to six months. If the pattern of the 2001 recession holds, this weakness would be less severe compared to declines registered in 2008 and early 2009.

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Diane September 13, 2010

This past Saturday, I worked my Farmers’ Market booth. It was an average day; I took in slightly less than I usually do.
Here are the mitigating circumstances:
The Market moved me out of my usual space when one of their regular vendors didn’t show up; they moved me into theirs, and I quickly found that our Farmers’ Market is actually three markets: the fruit/veggie/nursery stands on 8th Street, the pre-produced and -packaged food goods on Oak Street (my usual branch), and the food court with field caterers in the alley. Each have their own crowd of regulars. Taken out of my element, and considering that I did an average day of sales is heartening.
My (new) neighbours were having a very slow day. They were selling half of what they were last year. This is disheartening. I talked to one vendor in the food court that sold out, others couldn’t make their costs.
Later on this past weekend, I found out that our neighbours across the street in the Saturday Market, were having a really thin time too. They were running at half of their sales at this time last year.
What do I pin it down to? [shrug] I could say, “Hey, it’s Eugene! We’re the brake shoes of the nation — every time the economy slows down we’re the first to feel the heat.” Instead, I’m baffled and all I can come up with is more questions. Why is Eugene’s economy so soft? Where do we point the finger? What’s the smoking gun? Any answers?

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