Oregon climbing out of a slump

As the top blew off Mt. St. Helens last spring, the bottom fell out of Oregon's economy. But there should be "considerably less destruction from both sources in the coming months," predicts Dr. Kevin Kelly, vice-president and economist at U.S. Bancorp.

The volcano's impact on Oregon was minor, compared with some other Pacific Northwest areas. Shipping, building, and tourism were immediately stifled, but the physical fallout affecting those areas has been cleared up.

Potential long-term damage boils down to Oregon's reputation for livability, according to Dr. Kelly. With the mountain and the economy distressed at the same time, however, it's still too early to separate the effects of the volcano from effects of the recession on the building and tourist industries.

As an example, Dr. Kelly points out that tourism in the Western states was already down 10 percent before the May 18 eruption.

The brief second-quarter uptick in home purchases and housing starts was good news for Oregon loggers since the rise was concentrated in Southern and Western markets. More than two-thirds of Oregon's lumber goes into Western building projects, so prolonged increases in Western sales could trigger mill openings.

"The housing market's problems are far from over," Dr. Kelly says, "but the bottom may have been reached in West Coast markets."

He says weekly layoff reports for lumber and wood products provided "some real surprises" in April and May. Oregon's No. 1 industry sustained "one of the sharpest and deepest blows over" in a very short period of time.

Layoffs jumped from almost nothing to 16,000 workers in a matter of weeks, as plant closings were widespread. June's total employment in lumber and wood products was 20,600 below the June 1979 figure of 83,800.

"Fortunately, the rash of plant closures has subsided," Dr. Kelly says. Weekly layoff reports show a mid-June level of 11,700 laid off, down sharply from the more than 16,000 high and the mid-May number of 15,300. Total employment in the industry gained by 2,300 workers last month, "a promising sign."

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