Lumber-dependent Oregon looks to diversification to ease slumps

A national recovery from recession may be starting, but it means little to the counties of Oregon dominated by the lumber and wood products industries. The state's economy can best be described as ''stalled.''

''Because this state has little control over national housing markets and lumber and wood products employment, we must use this time to deal with the part of our destiny that is controllable,'' urges Dr. Kevin Kelly, manager of the economics department of United States Bancorp and a senior vice-president of the holding company.

He contends it is time for Oregon to take a long-term look at its economy and make those changes needed to diversify jobs and income. According to US Bancorp's Oregon Business Barometer, a quarterly economic forecast prepared by Dr. Kelly's department, any recovery will be weak.

The Barometer index (1979 equals 100) rose to 188.9 in this year's second quarter, up 2.1 percent from the 1981 comparable quarter's average of 185. The combination of a very shaken consumer, illiquid business balance sheets, and remaining high interest rates will keep spending growth at sluggish levels, Dr. Kelly predicts.

''A microscopic recovery is not good news for Oregon,'' he says. The Portland metropolitan area may benefit slightly from rising consumer purchasing power, but the unemployment levels throughout the rest of the state will keep activity depressed until interest rates move down and housing starts move up, he figures.

June numbers showed more Oregonians on payrolls and fewer residents out of work, but the totals were far short of normal seasonal levels. The state's wage and salary employment index demonstrated this weakness by dipping to 125.2 in June, showing 5.5 percent fewer people on nonfarm payrolls than in June of 1981.

Seasonally adjusted wage and salary employment posted an unbroken string of declines since last January. The state's unemployment rate dropped a notch in June to a flat 11 percent. ''This small of a decrease may mean nothing at all or merely that the number of discouraged workers has risen,'' Dr. Kelly says.

Through the early summer months, most Oregon employment categories reported increased hiring. Among manufacturing sectors, lumber and wood products and food processing accounted for most of the gain. But the modest increase still left the state with 19,000 fewer manufacturing employees than in 1981.

New housing starts declined 15 percent from May to June, totaling only 911, 000 for the month. A continuing fall in interest rates should prove a step in the right direction for the state's ailing wood products industry.

Oregon's agriculture also suffered from poor price conditions, although prospects for the state's wheat crop look promising for the coming year. Weather permitting, most areas are looking forward to average or maybe even slightly better than average yields, but not enough to compensate for the weak price levels. Beef cattle on feedlots are turning a profit for a change, says Dr. Kelly, but ''overall, 1982 will be another difficult year for Oregon's agriculture industry.''

Despite the gloom, Oregon tourism has shot up 24 percent from 1980 levels, although still down slightly from 1981. Visitors flocked in large numbers to favorite vacation spots in the state over the July 4 weekend. Increases in job totals for service industries also rose during the second quarter, because of new tourist dollars.

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