Oregon’s economy is poised for continued stability as the Department of Administrative Services (DAS) Office of Economic Analysis (OEA) presented its March 2025 revenue forecast.
Chief Economist Carl Riccadonna and Senior Economist Michael Kennedy delivered the latest projections to the Oregon Legislative Revenue Committees, emphasizing an optimistic outlook despite economic uncertainties.
Takeaways from the March Forecast
The revenue forecast plays a crucial role in shaping Oregon’s budget, guiding policymakers on fiscal planning for the upcoming biennium. The latest analysis highlights:
- Projected Stability: Oregon’s General Fund ending balance for 2023-25 stands at $2.59 billion, reflecting a slight revenue decrease of $89 million compared to December projections.
- Positive Growth for 2025-27: The forecast anticipates an increase of $350 million in available General Fund resources, bringing the total to $38.2 billion.
- Soft Landing Scenario: Economic growth is expected to moderate without triggering a recession, aligning Oregon with national trends.
- Sector-Specific Concerns: Weaknesses in housing, business investments in structures, goods exports, and federal government activity could pose risks to long-term growth.
Economic Trends Shaping Oregon’s Future
1. Revenue and Budget Implications
The state’s revenue forecast indicates a measured approach to budgeting:
- Personal Income Tax revenues for 2025-27 are projected to decline by $227 million, influenced by an expected $582 million kicker payout to taxpayers.
- Corporate Excise Tax revenues will drop by $111 million, aligning with broader economic adjustments.
- Lottery revenue projections remain steady, with a slight 0.5% decrease as stronger traditional and sports betting offset weaker video lottery sales.
2. Labor Market and Population Dynamics
Oregon’s job market remains resilient, though challenges persist:
- The unemployment rate is forecasted to peak at 6.8% by early 2025, reflecting national economic pressures.
- Job creation remains weak, with hiring slowing across multiple industries.
- Population growth projections have been revised downward to 0.6% average annual growth through 2033, raising concerns about long-term workforce sustainability.
3. Industry-Specific Trends and Economic Risks
Oregon’s economic landscape is increasingly tied to national and global factors:
- Trade sensitivity: The state’s heavy reliance on timber, agriculture, technology, and apparel industries makes it vulnerable to trade policy shifts.
- Capital gains realizations have plummeted by more than half since their peak in 2021, impacting taxable income levels.
- Corporate income and excise taxes have nearly tripled over the past five years, adding complexity to business planning.
- Marijuana tax revenues are expected to decline by 13% in the 2031-33 biennium, reflecting market shifts and regulatory challenges.
What’s Next for Oregon’s Economy?
While the March 2025 forecast reinforces confidence in Oregon’s economic stability, policymakers must navigate emerging risks.
Careful fiscal planning is critical to sustain growth amidst sensitivity to economic trends and trade tensions nationally.
Lawmakers will use these projections to shape the 2025-27 biennium budget, ensuring continued investments in infrastructure, education, and economic resilience.
Oregon businesses and residents can stay informed about the latest economic insights by visiting the Office of Economic Analysis at www.oregon.gov/das/oea.
Sources: Department of Administrative Services, Oregon.
