Oregon Economic Update: Cautious Optimism for 2026

by Amy Vander Vliet

April 13, 2026

Oregon’s economic output (as measured by Gross Domestic Product, GDP) contracted sharply in the beginning of 2025 but rebounded as the year progressed. In an unusual turn of events, this economic growth didn’t translate into job gains. Over-the-year employment growth turned negative by spring and remains in the red thus far in 2026. 

Oregon’s Office of Economic Analysis (OEA) suggests several possible reasons for the mystifying disconnect between GDP and job growth, which is also happening nationally albeit to a lesser degree:

  • Businesses over-hired following the pandemic and are now “right-sizing”.
  • Businesses aren’t convinced that growth will continue, thus holding off on hiring.
  • There is an unusually long lag between the increase in economic output and job growth. 
  • Technology is supplanting labor: the economy is able to produce more with fewer workers. In the past, the adoption of computers and automation have powered productivity gains. Today, artificial intelligence is on economists’ radar as a potential explanation for the output-hiring disconnect.

OEA believes the reason behind Oregon’s weak labor market is likely a combination of these factors, but that AI isn’t the primary driver. Their reasoning is that it’s too soon for AI to cause high levels of displacement, and that the unemployment data doesn’t support AI-driven job losses ― unemployment trends in states with the highest AI adoption rates don’t look to be that different from the national trend or from the lowest adoption states.

Consequently, OEA concludes that weak labor market conditions are temporary and that Oregon’s 2025 GDP growth will result in 2026 job growth. They expect the state will add 11,400 jobs this year (+0.6%), picking up speed in 2027 (16,500; 0.8%). Underpinning this forecast is the strong national outlook and their anticipated uptick in the state’s population fueled by a rebound in migration. 

Note: OEA’s forecast was produced prior to the Iran war and the subsequent increase in oil prices. 

OEA's complete report is available at www.oregon.gov/das/OEA/Pages/forecastecorev.aspx.

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