Each year, ECOnorthwest analysts conduct an in-depth economic analysis of regional data to support the Portland Metro Chamber’s State of the Economy. Last year, troubling data showed early warning signs of a potential economic “doom loop,” and this year we looked closely for evidence of a change in course. Unfortunately, the Portland economy continues to show concerning signs across the board, and the “new normal” is indicative of a continuing erosion of the local economy. Moving away from this new normal and achieving sustainable growth will require both confidence in the region’s direction and creativity in how we respond.
The “new normal” isn’t very normal, but it’s likely to persist
The region isn’t moving through a typical cycle of downturn and rebound. We’re operating in a new national baseline of reduced demand for commercial real estate, declining birth rates, reduced immigration, and slow job growth. In combination with unique local policies and the structure of our regional economy, our communities are at high risk of economic and financial distress. This is unlikely to change without thoughtful action.
Current indicators are weak, and the forward signals are troubling
Lagging measures still point to strain: population change, employment change, and housing affordability remain challenging. At the same time, leading indicators raise concern about what comes next—particularly sentiment and confidence, vacancy patterns, and the housing production pipeline.
Our fiscal system is built for growth, and when growth stalls, the system cannot function
Local public finance was designed with a baked-in assumption of sustained expansion of population, jobs, and incomes. When growth stalls, the impacts extend beyond slower revenues; it limits service provision, stresses long-term obligations, and limits the region’s ability to invest in the fundamentals that support resilience. Put simply, if we don’t grow, our fiscal system cannot function.
Structural fixes, and the confidence to implement them, are required
This moment calls for structural action, not incremental adjustments. That means strengthening the conditions for well-paying jobs, improving traded-sector performance, and accelerating housing production. Confidence affects whether households stay, businesses invest, and talent chooses the region.
Portland is no longer in the housing affordability Goldilocks zone, and competition is increasingly regional
For years, Portland benefited from strong job growth alongside comparatively attainable housing, putting us in an affordability Goldilocks zone. That balance has shifted as our housing affordability has deteriorated, and households and firms now have compelling options in peer counties around the region and the country. This changes where people live, where spending occurs, and where investment flows.
It’s go time
A healthy economy reflects the strengths of a community, and progress has to start with the fundamentals: well-paying jobs, affordable homes, and vibrant neighborhoods. This work begins with getting honest about what “good growth” means in the Portland context, and committing to it with enough confidence to navigate the inevitable tradeoffs.
