A slow recovery seen for Oregon this summer

Oregon's economy, hit by recession and the worst housing slump since the end of World War II, has bottomed out and will begin a slow recovery this summer, Kevin Kelly, a United States Bancorp economist, predicts. By next year the state's economy will gain ''real strength,'' he says.

The bank holding company's Oregon Business Barometer index (1979 equals 100) held constant through this year's first three months at about the same level as a year ago. The seasonally adjusted indicator had showed a slight improvement at the close of 1981.

A major deterrent to significant early economic recovery is lack of consumer confidence in the marketplace, Dr. Kelly says. Concern over unemployment has caused reluctant buyers to postpone making major purchases or extending current debt.

The home building industry has been hit by the worst back-to-back years in its history. After posting sales of 1.3 million units nationally in 1980, sales declined last year to 1.1 million units. Oregon's lumber and paper industries are expected to show improvement this year, but Dr. Kelly says the recovery will be ''arduous.''

Employment in the state's lumber and wood products sectors fell to an average 55,300 workers during the last quarter, off 27,000 jobs from the peak in 1979.

Meanwhile, Japan's housing market has also hit the skids, producing a double whammy for Oregon, which exports lumber to Japan. Log exports from Oregon and Washington in 1981 were down about 30 percent from the 1980 level.

If that was not bad enough, Canada has been grabbing larger shares of US lumber markets in recent quarters. The Canadian government owns about 90 percent of that nation's lumber resources and prices the commodity to win market share. As a result, customers can purchase Canadian stumpage at lower prices than would be available in Oregon during slow years. And a weakening Canadian dollar has made US lumber more expensive.

Dr. Kelly points out that pulp and paper companies in Oregon held up long after lumber producers stumbled but now are into the same recession. He expects further problems this year, since both domestic and foreign markets show no strong signs of recovery. Many paper uses, such as packaging, vary directly with levels of business activity. So this sector is likely to follow the rest of the economy in making a slow recovery.

The falloff in orders and production appears to have ended with the new year in both the electronics and instruments industries in Oregon.

Depressed economic conditions at home and overseas and bumper harvests almost everywhere have weakened farm prices. At the end of March, for instance, the Oregon Farm Price Index was off 8 percent from a year earlier and the Crop Price Index was down 12 percent. Dr. Kelly predicts the net income generated by Oregon's farms and ranches will decline in 1982 for the third year in a row.

One bright spot in the agricultural picture may be the acreage reduction program announced in January by the US secretary of agriculture. Farmers who reduce plantings for harvested acreage by 15 percent for wheat and 10 percent for feedgrains will be eligible for target price protection, Commodity Credit Corporation loans, and other benefits.

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