2016 was a banner year for the US economy. Housing prices overall have now fully recovered from their lows during the financial crisis, consumer confidence is up and the Dow breaks record highs on the regular.
But Oregon stood out from the rest as the most economically improved state in 2016, according to new data from the Federal Reserve Bank of Philadelphia.
The Beaver State edged out Utah with a 12.43 point jump in its coincident index, a metric showing the current state of economic activity within a particular area.
“Oregon tends to outperform the nation as a whole during expansions,” Tim Duy, the co-director of undergraduate economics at the University of Oregon, tells Yahoo Finance in an email. “A solid dynamic typically sets in where job growth and in-migration of new residents reinforce each other.”
The state sees net positive migration into the state, with many individuals moving in from California. More than 14,000 people migrated from California in 2011 alone, according to residential real estate search engine FindTheHome. Much of that could be explained by the less than ideal conditions in California, including a statewide drought and its reputation for being one of the most heavily taxed and regulated states in the US. It doesn’t hurt that personal incomes in Oregon are up nearly 5% since October of last year, according to FindTheHome.
Despite the influx of residents, there are still jobs to be found in the state. Job growth and recovery from the recession saw the state’s unemployment rate drop from 9.3% in October 2011 to 5.3% in October 2016, according to Bureau of Labor statistics data.
Oregon may also be “most improved” because its economy can be more volatile than other states’ economies. That’s because of its migration growth and reliance on manufacturing, according to Josh Lehner, an economist in the Oregon office of economic analysis. At a time where cutbacks in manufacturing spurred the populist backlash that helped lead to the rise of President-elect Donald Trump, Oregon enjoyed a 3.88% increase in manufacturing hourly wages and a 1.49% increase in overall manufacturing hours.
“Oregon is not immune to the long-run issues of globalization and technological change, but our manufacturing declines have been considerably less severe than in most states’,” Lehner told Yahoo Finance.
Those declines have been less severe than other states’ because of Oregon’s diversified manufacturing sector, according to Lehner. Rather than relying on textiles or automobile plants, Oregon’s manufacturing sector focuses on food processing, semiconductors, and aerospace.
Of course, Oregon’s diversified manufacturing doesn’t make it immune from the pitfalls of manufacturing. Over-reliance on manufacturing, as the US has seen, can be a recipe for instability, according to Mark McMullen, another state economist in the Oregon Office of economic analysis.
“Dependence on manufacturing and resource industries brings many economic benefits, but also exposes Oregon to the volatile business environment that many of these firms face,” McMullen says.
Regardless of that risk, Oregon was the most popular destination to move in 2015, according to United Van Lines. In 2016, Oregon saw more households move to the state than ever before, surpassing the previous record level seen during the tech boom in the 1990s, according to McMullen.
“While the big national migration trends are southern and western (out of New England and the Midwest), on the West Coast those migration flows are northern,” Lehner says.
If the low cost of home prices were what drew outsiders to the state, there is a reason to think they may not be attracted for long.
The most recent median sale price for homes in Oregon was $280,000, up 13.80% since last year, according to FindTheHome. This indicates that that sale prices tend to be higher in Oregon than in the rest of the United States, where the median sale price was $214,056. The state’s home price index is forecasted to skyrocket around 91% in the next 20 years, according to FindTheHome.
McMullen also notes that the state today is past its peak in terms of job growth and retail trade. Goods-producing industries are weakening as Oregon’s manufacturers have also cut jobs in recent months.
The state has seen economic booms and bust in the past, but McMullen stills sees people attracted to the state. “Since the time of Lewis and Clark,” he says, “when jobs are available in Oregon, people want to move here.”