NAI NBS First Quarter Economic Report

National Highlights

President Barack Obama took immediate economic policy action after his inauguration in January. A $787 billion stimulus package, passed in mid-February, includes tax cuts for most Americans, increased unemployment benefits, and funds for infrastructure projects, education and health care. In addition, a $75 billion mortgage assistance program aims to help up to 9 million Americans refinance their homes or avoid foreclosure.

The government is also taking steps to mend the nation’s financial system. Treasury Secretary Timothy F. Geithner revealed some details of a financial system reform, which would provide the government with more power to intervene in non-bank financial institutions. The major stock markets gained 500 points with the news of this plan on March 23, whereas in late February and early March the markets had fallen to lows not seen since 1997.

National unemployment numbers continued to be discouraging. Unemployment rose to 8.1% in February, the highest it’s been since 1983. Major employers across many sectors, from Nissan to Caterpillar to Home Depot to Sprint Nextel, slashed thousands of jobs.

But after months of disheartening news, a few economic indicators showed positive signs this quarter. Sales of existing homes grew 5.1% in February, according to the National Association of Realtors, and 30-year mortgage rates have fallen to 4.85%, the lowest level since 1971. Orders for durable goods also increased 3.4% in February, according to the Commerce Department, which was better than expected. And consumer spending rose 1% in January and .2% in February after months of considerable declines.

Local Highlights

State unemployment rose to 10.8% in February, with 9.6% unemployment in the Portland Metropolitan Area. Two major Portland-area employers, Oregon Health & Science University and Intel, each laid off up to 1,000 people this quarter. However, Intel announced that it will invest $1.5 billion at Intel Oregon during 2009-2010. Oregon will also benefit from stimulus measures. Go Oregon!, a state stimulus package, will provide $175 million for infrastructure projects, and federal stimulus funds include $76 million for public transportation and $334 million for road and bridge repairs.

Portland’s bid for a Major League Soccer team was the talk of the town this quarter. The Timbers gained approval to move up to the majors in 2011 with the franchise fee paid by owner Merritt Paulson. If funding can be acquired, the Timbers will play at an upgraded PGE Park, and the minor league Beavers baseball team will move to a new stadium in the Rose Quarter. City leaders and stakeholders are also working on renewing the Rose Quarter and surrounding area as a year-round destination for entertainment and dining, not just sporting events.