Economist: Recession over, except for job market

SALEM, Ore. (AP) - State economist Tom Potiowsky told lawmakers Thursday that Oregon's recession has likely ended, but its dismal employment situation will persist.

No state agency designates when Oregon is officially in or out of recession. "But I believe we have enough indicators that technically the recession has ended in Oregon or is about to," Potiowsky told the House and Senate revenue committees while presenting his quarterly revenue forecast.

The economist said job losses should continue until an uptick occurs well into next year. Potiowsky said recovery to pre-recession job levels is likely to take until early in 2013.

"There is a big difference between when a recession ends and when the jobs come back," he said.

Overall, the forecast shows the state's anticipated general fund tax revenue down another $43.5 million and lottery revenues dropping by $14.8 million.

The latest forecast projects little change in income taxes, the backbone of the state's general fund.

It projects a $10.2 million decline in personal income taxes and $9.2 million in corporate income taxes from the Aug. 27 forecast. Those projected losses are small compared to a total of more than $13 billion for the next two-year budget cycle - so the forecast is essentially flat.

Other general fund revenue is projected to drop $24.2 million, largely because of reduced interest earnings.

However those numbers would change dramatically if voters in January reject $733 million in tax increases passed by the 2009 Legislature. The tax hikes are aimed at corporations and the wealthy.

The drop in lottery money is attributed to an indoor smoking ban that took effect Jan. 1 and a cut in discretionary spending because of the recession that has kept the unemployment rate above 10 percent since February.

(Copyright 2009 by The Associated Press. All Rights Reserved.)