Oregon’s creeping recovery becomes more stable

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By Tim Duy,
Oregon Economic Forum

sponsor, KeyBank.

Attached is the University of Oregon Index of Economic Indicators for November 2010. The release date is January 12, 2011. Special thanks to our sponsor, KeyBank.

The University of Oregon Index of Economic Indicators™ gained in November, rising 0.9 percent to 87.9 (1997=100). Highlights of the report include:

Although indicators were generally positive overall, an increase in the weight distance tax collected – a measure of trucking activity – provided an additional boost to the UO Index. That increase, however, is likely overstated somewhat as it does not yet account for a recent increase in the weight distance tax rate. Accounting for that increase is currently a challenge as some carriers may have elected to shift the actual tax payments into 2011 to defer the immediate impact of the increase. The delayed response to the new tax regime will likely last through the first quarter of 2011, at which time the higher tax rates should be fully reflected in the data. At that point, data will be revised to account for the higher tax rate.

Labor market indicators were mixed. Initial unemployment claims edged up to the highest level since August. In contrast, employment services payrolls (largely temporary help firms), rose to their highest level since July 2010, an indication of firming labor demand.

Residential building permits (smoothed) gained slightly, continuing to bounce along a bottom. Despite a period of low interest rates, the housing market remains challenged. The end of homebuyer tax credits brought renewed pricing pressure to the Portland market, as evidenced by the October decline in the Case-Shiller home price index.

The interest rate spread between 10-year treasury bonds and the Federal Funds rate increased for the first time since April 2010 as incoming data suggested the US recovery is gaining strength, leading investors to bid up the rate on long term treasury bonds.

• Compared to six months ago, more than half the index components declined while the UO Index fell 2.6 percent (annualized). This declines compares favorably with October’s 6.0 percent decline. Such positive turning points in the six month percentage changes typically precede improving economic conditions, further alleviating fears of a double-dip recession that emerged during the summer.

Timothy A. Duy
Director, Oregon Economic Forum
Director, Undergradute Studies
Department of Economics
University of Oregon – 1285
Eugene, OR 97403-1285