What the Data Show
This is the fourth economic check-up and focuses on three measurements of the Portland-metro economy:
- Gross Metropolitan Product (GMP)
Portland-metroís economic performance from August 2007 to August 2013 will be compared to the following different geographic areas:
- The average of all U.S. metropolitan areas
- Peer group regions (Sacramento, St. Louis, Cincinnati)
- Aspirational group regions (Seattle, Denver, Minneapolis)
These groupings of peer and aspirational regions have been used in past Value of Jobs reports as a way to give better context to how Portland-metroís economy is functioning at the national level.
Gross Metropolitan Product: Portland-metro outperforms
Gross Metropolitan Product (GMP) is the market value of all the goods and services produced in a Metropolitan Statistical Area (MSA). Out of the top 100 MSAs in the United States, Portlandmetro is second only to Austin in the growth of GMP during its recovery from the economic downturn.
Portland-metroís GMP bottomed out in 2009 and had increased by about 22 percent through the second quarter of 2013. During the last year, the GMPs of the average top 100 MSAs grew faster than Portland-metro (2.7 percent national average vs. 1.2 percent for Portland-metro); however, from the recessionary trough of 2009 through 2012, Portland-metro grew at a significantly higher rate than the average MSA.
The Portland-metro GMP has increased by 60 percent since 2004, compared to 17 percent for the U.S. Gross Domestic Product total during the same period, as shown in Figure 1. The peak of the Portland-metro GMP prior to the recession was in the third quarter of 2008, and it had surpassed that peak level by 17 percent through the second quarter of 2013. By comparison, the U.S. pre-recession peak was in the first quarter of 2008 and it has only surpassed that level by 4 percent.
GMP is a function of employment, income and productivity. As shown later in the report, incomes have remained relatively low during Portland-metroís recovery, so the growth in GMP is primarily due to increased productivity and employment returning to 2007 levels. Productivity gains are attributable largely to the growing and highly automated semiconductor industry.
Return of jobs: Good but not great
The Portland-metro economy lost 72,400 non-farm jobs from 2008 to 2009. In 2013, about 65,900 jobs had been recovered; there are currently 6,500 fewer non-farm jobs than the peak level, which represents a 0.5 percent continuing loss. The recovery of non-farm jobs in Portland-metro has been slightly better than the U.S. metro average, which is still 1 percent below the 2007 peak level.
Virtually all sectors saw continued growth between 2012 and 2013, although, for most, the pace slowed from the recovery experienced between 2011 and 2012, see Figure 2. Only the leisure and hospitality industry added jobs at a rate that outpaced 2011-12. In terms of job losses, only the government sector, which includes federal, state and local governments, including public schools, lost ground from 2012 to 2013. That sector lost an additional 700 jobs in the last year, bringing its total continuing job loss since 2009 to 3,900.
ReturnJobs vs. peer regions: Portland-metro leads the pack
Portland-metro has outperformed its peer regions of Cincinnati, St. Louis, and Sacramento in the number of jobs added since the recession. Portland-metro lost a greater percentage of jobs than Cincinnati and St. Louis, but has since recovered all but 0.5 percent of the jobs lost, while those other two metros still have 3 percent to recover. Sacramento lags all of the other peers, having dropped by the greatest percentage and still needing to recover 9 percent of the jobs to regain the 2007 level.
Jobs vs. aspirational cities: Portland-metro falling short
Cincinnati, St. Louis and Sacramento metro areas may be Portland-metroís closest counterparts by many measurements, but Portland-metro aspires to be like the more economically robust Seattle, Minneapolis and Denver regions. All of these aspirational metros have recovered all of the jobs they lost in the recession, and, in fact, have grown relative to their 2007 totals. Since 2011, Portland-metro has been adding jobs at a slightly slower rate than the three aspirational cities; Portland-metro increased the number of jobs by 4 percent, while the other cities increased by 5 percent as shown in Figure 3.
Manufacturing: An economic bright spot
The manufacturing sector comprises two major sub-sectors: durable goods, which include metal products, wood products, computer equipment, etc., and non-durable goods, which include consumable products such as food and paper. Portland-metroís employment in both manufacturing sub-sectors fared better than the U.S. average during the recession.
While manufacturing fell in both Portland-metro and the U.S. overall, Portland-metro did not fall as far as the national metro average and it has recovered at a faster pace. While jobs were added back, the Portland-metro recovery for durable goods jobs slowed in 2013 compared to 2012, but 2013 recovery in non-durable goods employment remained on pace with 2012.
Meanwhile, the U.S. metro average saw no additional jobs added in 2012 or 2013 for both the durable and non-durable goods manufacturing sector jobs. Manufacturing jobs are important to the overall health of the regional economy because, on average, they pay significantly more than other jobs, as shown in the 2012 Value of Jobs Manufacturing report.
Traded vs. local sector jobs: An area of focus
Another measure of economic health is the number and growth of traded-sector jobs. The traded sectors sell goods and services outside the local economy, bringing new money into the region. By contrast, local sectors sell goods and services to people and businesses in the same area so that money is shifted within the local economy. As shown in the 2012 Value of Jobs Traded-Sector report, for every one additional traded-sector job in the local economy, there are 2.5 local sector jobs created.
The change in pattern of traded- versus local-sector employment since 2007, as shown in Figure 4, is largely explained by consumer behavior. During economic downturns, households and businesses are more likely to cut back on the purchase of traded-sector goods, such as computers and cars, than on the purchase of local goods and services, such as banking and medical care, that meet their ongoing needs. As the recovery has gained steam, households and businesses have begun to shift back to normal spending patterns, increasing employment in the traded and local sectors at about the same rate. The recession loss of traded-sector jobs was greater than the local sector loss; as a result, traded-sector recovery has lagged behind the local sector. In 2013, local sector employment grew beyond the 2007 level, but the traded sector is still 9,200 jobs below the 2007 level.
Median Household Income vs. peer cities: Portland-metro ahead
Despite ongoing recovery in jobs, median household income is still lagging behind the 2008 level in real terms, but more recent trends are encouraging. In 2012 dollars, the median household income in Portland-metro decreased by 8 percent from 2008 to 2012. However, for the first time since 2008, median income in Portland-metro increased from $56,023 in 2011 to $56,978 in 2012 (in 2012 dollars). Portland-metroís peer regions, Cincinnati, Sacramento, and St. Louis, also saw increases in median household incomes between 2011 and 2012.
Median Household Income vs. aspirational cities: Portland-metro behind
In 2008, Portland-metro was already behind Seattle, Minneapolis and Denver in median household income; with Seattle and Minneapolis at about $70,000 and Denver at about $64,000, compared to $62,000 in Portland-metro. During the recession, the gap grew wider. Seattle, Minneapolis and Denver metros all lost income during the recession, but Portland-metro fell further and faster. Median household incomes for the aspirational regions remain lower in real terms than in 2008, although they all saw increases between 2011 and 2012. In 2012, the Portland-metroís median household income lagged further behind the 2008 level than any of the aspirational regions, as shown in Figure 5. In an income-tax-dependent-state like Oregon, this decline has a significant impact on funding for important public services.