Marginal GainsUnderstanding Bend’s Economic Potential

Damon RunbergEconomist

Oregon Employment Department

The aggregation of marginal gainsDave Brailsford

“The 1 percent margin for improvement in everything you do.”

A Great Recession, but a Grand Recovery

113%

70%

75%

80%

85%

90%

95%

100%

105%

110%

115%

120%

1 4 71

01

31

61

92

22

52

83

13

43

74

04

34

64

95

25

55

86

16

46

77

07

37

67

98

28

58

89

19

49

71

00

10

31

06

10

91

12

11

51

18

12

11

24

Pe

rce

nt

of

Pre

vio

us

Pe

ak

Em

plo

ym

en

t

Months since Previous Peak Employment

Unemployment levels near historic lows

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Jan

-20

06

May

-20

06

Sep

-20

06

Jan

-20

07

May

-20

07

Sep

-20

07

Jan

-20

08

May

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08

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08

Jan

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09

May

-20

09

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-20

09

Jan

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10

May

-20

10

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10

Jan

-20

11

May

-20

11

Sep

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11

Jan

-20

12

May

-20

12

Sep

-20

12

Jan

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13

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-20

13

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-20

13

Jan

-20

14

May

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14

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-20

14

Jan

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15

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-20

15

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15

Jan

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16

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-20

16

Sep

-20

16

Jan

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May

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17

Sep

-20

17

Se

aso

na

lly

Ad

just

ed

Un

em

plo

ym

en

t R

ate

Levels of production reaching new heights

FHFA, All-Transaction Home Price Index

$4.0

$4.5

$5.0

$5.5

$6.0

$6.5

$7.0

$7.5

$8.0

$8.5

$9.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gro

ss D

om

est

ic P

rod

uct

(in

bil

lio

ns

of

20

09

ch

ain

ed d

oll

ars)

Economic Output 22% higher in real dollars compared to 10 years ago

Home prices completely recovered

Bend-RedmondEugene

Medford

Portland

Salem

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46

Pe

rce

nt

of

pre

vio

us

pe

ak

ho

usi

ng

pri

ces

Quarters since previous peak housing prices

FHFA, All-Transaction Home Price Index

Have we reached the mountain top?

Recovered from the recession 7.5%

-15%

-10%

-5%

0%

5%

10%

Jan

-20

02

Jun

-20

02

No

v-2

00

2

Ap

r-2

00

3

Sep

-20

03

Feb

-20

04

Jul-

20

04

Dec

-20

04

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-20

05

Oct

-20

05

Mar

-20

06

Au

g-2

00

6

Jan

-20

07

Jun

-20

07

No

v-2

00

7

Ap

r-2

00

8

Sep

-20

08

Feb

-20

09

Jul-

20

09

Dec

-20

09

May

-20

10

Oct

-20

10

Mar

-20

11

Au

g-2

01

1

Jan

-20

12

Jun

-20

12

No

v-2

01

2

Ap

r-2

01

3

Sep

-20

13

Feb

-20

14

Jul-

20

14

Dec

-20

14

May

-20

15

Oct

-20

15

Mar

-20

16

Au

g-2

01

6

Jan

-20

17

Jun

-20

17

Ov

er-

the

-ye

ar

em

plo

ym

en

t ch

an

ge

(in

pe

rce

nt)

If you just stop for a minute and ask yourself,

is there anyway to progress from where you are now?

Of course there is,

I can do this a little bit better or that a little bit

better.

Dave Brailsford

Where can we still make “marginal

gains”?

We can focus on…retaining AND expanding the labor pool

0

2

4

6

8

10

12Se

p-1

0

Dec

-10

Mar

-11

Jun

-11

Sep

-11

Dec

-11

Mar

-12

Jun

-12

Sep

-12

Dec

-12

Mar

-13

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-13

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-13

Dec

-13

Mar

-14

Jun

-14

Sep

-14

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-14

Mar

-15

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-15

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-15

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-15

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-16

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-16

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-16

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-17

Jun

-17

Sep

-17

Un

em

plo

ye

d p

er

He

lp W

an

ted

Ad

Over 65% of vacancies identified as “difficult-to-fill” in 2016…

Primarily due to a lack of applicants

…this means we need to keep attracting young workers

…and wages need to rise (or cost of living needs to lower)

$-

$5

$10

$15

$20

$25

$30

Jan

-08

May

-08

Sep

-08

Jan

-09

May

-09

Sep

-09

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

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-11

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-12

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-12

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-12

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May

-13

Sep

-13

Jan

-14

May

-14

Sep

-14

Jan

-15

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-15

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-15

Jan

-16

May

-16

Sep

-16

Jan

-17

May

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Sep

-17

Ave

rag

e H

ou

rly

Ea

rnin

gs

(12

-mo

nth

mo

vin

g av

erag

e)

We can focus on…our “resistance” to recession

Res

ista

nce

Recoverability

MOST RESILIENT

LEASTRESILIENT

Deschutes County

…this means diversifying our economic base

0

20

40

60

80

100

120

140

Restaurantsand Other

Eating Places

Management,Scientific,

andTechnical

ConsultingServices

WholesaleElectronic

Markets andAgents and

Brokers

ComputerSystems

Design andRelatedServices

ResidentialBuilding

Construction

Offices ofReal EstateAgents and

Brokers

Services toBuildings and

Dwellings

BuildingFinishing

Contractors

Offices ofPhysicians

Offices ofOther HealthPractitioners

# o

f n

ew

bu

sin

ess

es

(20

10

-20

15

)

“Lifestyle” Businesses

Construction Businesses

Health Businesses

…by marketing our competitive advantage

“I urge [tourists] to come and come many, many times to enjoy the beauty of Oregon. But I also ask them, for heaven’s sake, don’t move here to live.”

Governor Tom McCall (1971)

Lifestyle is not sufficient, but it is essential

We can focus on…the region, not just local

12.7%

-5.2%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Employed Nonfarm Jobs

Over the past 20 years in Crook County…

“Forget about perfection; focus on progression, and compound the improvement.”

David Brailsford