Dr. Mike Wilkerson, Senior Economist for ECONorthwest, on the Uneven Recession, Automation and the Future of Portland’s Growth
I recently sat down (virtually) with Dr. Mike Wilkerson who is an economist at ECONorthwest specializing in economic analysis, modeling, and real estate analysis. Mike does studies for both public and private sectors in the area. We discussed which sectors have been impacted the most by the pandemic, the pace of economic recovery and the long-term effects of the pandemic on the labor market. He also offered his insights on the future of the Portland office market based on the research his team is doing at ECONorthwest.
The Uneven Recession & Unknown Recovery
Now that a decent amount of time has passed, we are getting a clearer picture as to which industries have been affected the most. Knowledge workers and those who have been able to work from home have suffered less. Mike noted that overall savings rates have gone up during the recession, and for the most impacted industries (restaurants/hospitality) the recovery is still unknown as some shutdowns and restrictions continue. The professional services industry has remained fairly unimpacted, but while construction continues to go on smoothly it could be heavily impacted by a downcycle.
Transportation makes up a large part of the local industrial sector. Since this has been one of the industries impacted most by the pandemic, our local manufacturing has taken a larger hit because of the concentration of these goods. In general, durable goods have seen the most impact, while the food and beverage sector has seen lesser impact.
Preparing for Growth and Automation
Mike predicts that 2021 GDP growth is expected to be around 6%, but this is mostly because of the large decrease in 2020 due to the pandemic. Industrial companies were already looking to make the shift into higher capital instead of labor because of the new efficiencies in automation, which could lead to decrease in certain industrial sector jobs. Mike added, “It will be interesting to see if the pandemic will push more companies early into automation. Or how much remote work will remain after, or even if business travel will ever return to normal.” We will not know of the permanent and lingering effects of the pandemic until much later.
The Future of the Portland Office Market
So far there have not been any announcements of big anchor tenants leaving Portland, and Mike believes factors that will affect whether or not these companies stay long term are the tax environment in Portland and how vibrant the areas that traditionally drew tenants will be after the pandemic. Mike continues to be optimistic of Portland’s growth, saying “overall, Oregon is at a very interesting inflection point. Births used to exceed deaths, but now deaths exceed births and the only way for us to grow is through in-migration. When the pandemic ends, I believe Portland still has all the factors to continue to attract a young and highly educated workforce, and with that comes more companies, more growth, and more prosperity into the area.”
To learn more about Mike’s work at ECONorthwest you can connect with him here.