“Although this forecast reflects the strength of Oregon’s economy, my focus remains on those currently facing hardship,” said Governor Tina Kotek in a statement. “We must resist federal proposals that threaten support for working families, particularly cuts to food aid and healthcare. We must continue advancing effective strategies to reduce the cost of living statewide. Oregon’s long-term success won’t happen by chance—we need deliberate efforts to create jobs and build a stronger economic foundation.” n nRepublican lawmakers in the state legislature interpreted the improved outlook as a reason to avoid new tax measures. n n”Despite better financial indicators, any deficit is concerning, and Oregonians are feeling economic pressure,” said Rep. Lucetta Elmer of McMinnville, leader of House Republicans. “Rising unemployment and high taxes are hurting households and pushing businesses out of the state. To grow our budget, we should reduce taxes and foster a business environment where companies can expand, not shrink.” n nData limitations and forecasting challenges n nState and federal economists caution that the current economic forecast should be approached with care, due to a significant gap in employment data from the U.S. Bureau of Labor Statistics. This disruption stems from a 43-day federal government shutdown that began October 1. The agency is scheduled to release September jobs data this Thursday, with October and November figures expected by early or mid-December. n n”These are called vital economic statistics for a reason—they’re essential for accurate forecasting,” said economist Riccadonna. n nPre-shutdown reports indicated slow job growth and persistent inflation linked to tariffs. While state analysts estimate Oregon has lost approximately 18,000 jobs compared to the same quarter last year—less severe than the 25,000 job losses seen between June and August of 2024 and the same period in 2025—Riccadonna noted, “we are operating with limited visibility.” He added that although hiring has slowed in some sectors, many workers are seeing wage increases. n nIn the absence of federal employment data, state economists are relying on alternative indicators such as monthly personal income tax collections, which suggest economic strain tied to sluggish, though not stagnant, job growth. n n”The recent federal shutdown affected our state in multiple ways: delayed benefits, furloughed workers, closed parks, and flight cancellations. It also postponed critical data we rely on for revenue projections. This forecast should be viewed cautiously,” said House Majority Leader Rep. Ben Bowman, D-Tigard. n nA diverging economic experience n nRiccadonna noted that while the economy had previously appeared to be slowing, there are signs of renewed momentum, reflecting resilience in the face of tariff-driven inflation. Average wages have risen slightly, partly due to inflation, and the stock market has reached record highs this year, driven largely by a few major tech firms—though Riccadonna warned against equating stock performance with overall economic health. n nAt the close of 2024, national economic growth stood at about 2.5%. It has since dipped to approximately 1.6%—just above the 1% threshold typically associated with recession. Forecasters anticipate growth will rebound to around 1.9% next year. n nBoth state analysts and the Federal Reserve agree this trajectory reduces the likelihood of a recession, though risks remain elevated compared to a typical year. n nRiccadonna highlighted that Oregonians are experiencing the economy differently depending on income level, resulting in a K-shaped recovery. Higher-income individuals are seeing financial gains, while lower-income households face declining purchasing power—a shift from the post-pandemic period when economic improvements were more broadly shared. n n”We are clearly seeing a two-tiered economy at present,” he said. n nUncertainty from trade policy n nThe upcoming Supreme Court decision on the legality of former President Donald Trump’s tariff policies could dramatically reshape the U.S. and Oregon’s economic outlook in early 2026. Because tariffs function as taxes, and the average effective rate under Trump’s approach was about 18%, removing them would effectively amount to a large tax reduction on imported goods. n nWhile beneficial for consumers, eliminating tariff revenue would create a fiscal shortfall. Congressional Republicans had planned to use this income to fund billions in spending and tax cuts passed in a major legislative package over the summer. Without it, the U.S. Treasury would need to increase borrowing, potentially triggering instability in global financial markets. n nApproximately 80% of the funding for those proposed cuts was expected to come from tariff collections.