Oregon economist Dr. Mike Wilkerson explains 'urban doom loop'

PORTLAND, Ore. (KOIN) — The latest revenue forecast was released last week and it says Oregon could bring in more revenue in the next biennium. However, another report by the state finds that housing prices are far outpacing wage growth and just 29% of Oregonians could afford to buy a home last year.

So what will 2025 look like when it comes to the Oregon economy and affordability for regular folks?

Dr. Mike Wilkerson, a partner and senior economist at ECOnorthwest, an economic research and consulting firm, joined Eye on Northwest Politics to answer this question and more.

While the revenue forecast appears to indicate that Oregon's economy is strong, Wilkerson said the state economy has underperformed relative to the rest of the United States. He believes this is fueled by a lack of job growth in the metro region within the last two years.

Additionally, possible changes at the federal level - including possible tariffs - could further affect our local economy.

"What we're potentially heading into is a period of time where costs will be going up faster than they have been," said Wilkerson. "And the relief that we have been starting to see glimmers of - through lower rates on interest for mortgages and things of that nature - are maybe are going to stall out and maybe even go back in the other direction."

The other concern is possible mass deportations that could have an effect on Oregon's agricultural sector. However, Wilkerson has more than just economic worries in that case.

"What concerns me beyond just mass deportations is just what impact that will send as a signal to just immigration in general," he said. "As a region and as a state, we are an attractor of people from outside of this country, while we lose residents to the rest of the country. And so - absent strong international migration - our population growth will be even more negatively impacted."

Much has also been made of the struggles of downtown Portland and according to Colliers, a 33.8% office vacancy rate in the central city. Mayor Wheeler is essentially begging people to come downtown to shop this holiday season.

While Wilkerson noted that in the last year, there has been the most foot traffic of any period since before the pandemic, he has further concerns the pandemic brought on what he refers to as an "urban doom loop."

"What that means is we see demand decreased from some exogenous event. So that was the pandemic. Hybrid and remote work decreased demand," Wilkerson said. "We have 30% vacancy. What that means is the value of those buildings decreases. And as the value of those buildings decrease, the revenue that local government has also decreased.

He continued, "And so at a time when the need for service level provision is highest, the revenues to support that are down. And so when we look at the city, for example, looking at a 5 to 8% budget cut at a time when we need increased levels of service provision, that's what has me a little bit concerned about the near-term forecast."

Watch the full interview in the video above.