Oregon Economic Update: Uncertainty

by Amy Vander Vliet

June 09, 2025

It’s a challenging time for economic forecasters. Recent developments have heightened the risks facing the economy, but the extent to which they will impact inflation and job growth is highly uncertain. Will there be a recession, or will the nation -and Oregon- instead enter a period of positive, albeit anemic, economic growth? The latest forecast from the Oregon Office of Economic Analysis (OEA) assumes the latter in their baseline near-term scenario but acknowledges recession is still a ‘clear and present danger’.

The reasons OEA believes we will avoid a recession are:

A resilient U.S. economy. Economic activity continues to expand; labor conditions are ‘solid’ per the Federal Reserve; and the unemployment rate remains stable.
Tariff rates are at or near peak. As of the forecast publication in mid-May, the current administration has shown willingness to negotiate. Additionally, court challenges to tariffs are pending and could result in reducing the effective tariff rate.
Declining consumer and business sentiment may soon stabilize and perhaps improve. Household and business confidence has soured, and this could negatively impact economic activity such as consumer spending, business investment, and job creation. However, the financial markets have steadied and trade policy uncertainty has lessened somewhat. If these trends continue, the decline in consumer and business confidence should ease and perhaps reverse course.
Fiscal and monetary policy are expected to support the economy. Although the Fed is unwilling to cut interest rates in the current environment of trade and inflation uncertainty, the markets expect rate cuts later this year. And the tax reform package that passed the House and is moving to the Senate might provide an economic stimulus if it results in lower tax rates.

Oregon is more susceptible to tariffs and trade wars given our relative dependence on exports as reflected in our GDP and manufacturing numbers. Our three largest exports are computer & electronic products, transportation equipment, and machinery. The three largest export destinations are Mexico, China, and Canada (comprising 45% of total exports in 2024). If trade policy is directed toward Pacific trading partners, and/or is focused on the tech sectors, Oregon risks a disproportionately large impact.

Nonetheless, OEA expects the state to add (a small number of) jobs in 2025 (5,300; 0.3%), picking up speed in 2026 (17,800; 0.9%). Underpinning this forecast is their national outlook and an expected uptick in the state’s population fueled by a rebound in migration. Labor conditions will soften and the unemployment rate will drift higher (5.2% by 2027), but we will (narrowly) avoid a recession.

Graph showing Annual Employment Growth Oregon and the U.S.