By Roger Lee, Vice President, Business Client Advisor
A few months ago, I met with local business leaders in the news industry. I was surprised to learn that their perception that Bend and the Central Oregon region’s economy are still largely dependent on two sectors: construction and tourism. While these industries play an essential role in our collective GDP and employment, they are less dominant today than ever in the past 100 years.
The perception is logical – these sectors were the primary protagonists in our past two economic downturns. In the Great Recession, construction and real estate (and accompanying professional services) comprised approximately 11% of total employment in the region. Nationally, the average American community has roughly 4.5-5.5% of its jobs in construction and related sectors. So when the bottom fell out of the real estate industry in 2007, and those jobs dropped to about 3% of total employment by 2009, three-quarters of our total unemployment rate could be attributed to this sector alone. To make things worse, we have historically concentrated on building products manufacturing, specifically wood products, which was also hit hard in that Recession. Today (July 2023 data), construction jobs account for about 7.8% of all employment, and wood products manufacturing 1.7%.
Fast forward to 2020, when COVID-related government edicts closed down or limited much of the economy, tourism was the most brutal hit of all (of the 178,200 jobs lost in Oregon that year, 81,600 (46.9%) were in the tourism sector), and took the longest to recover fully. Again, Central Oregon was over-weighted compared to our peers – roughly 17% of all jobs were in this sector compared to 8.3% nationally. Job losses in the pandemic were even more dramatic than those in the construction industry during the Great Recession but rebounded faster. Today, 13.8% of our total employment is in leisure and hospitality, the lowest non-recession figure in decades.
As mentioned above, business leaders were interested to learn that the region’s economy has steadily diversified over the past two decades despite these lopsided recessions. In the traded sector (economic development jargon for companies that export most of their goods or services outside the region) that included the growth and maturation of 10 different industries:
- Administrative Centers & Headquarter Operations
- Advanced Manufacturing
- Bioscience (pharma, medical device)
- Brewing & Distilling
- Building Products
- Outdoor Gear & Apparel
- Professional Services
- Specialty Food Products
- Tech (hardware, software, data centers)
Each of these industries has built or retained critical mass in terms of the number of companies (ranging from 20-130 per) and total employment (ranging from 500-2,000 jobs). One thing is clear: for 2024, a looming economic downturn will not be concentrated in our region primarily to one sector, as was the case for our two most recent recessions. Economic diversification is helping create economic resiliency to weather troughs in the business cycle.
In the next few years, look for bioscience, particularly in pharmaceutical research, development, and production, to be the high flyer for growth and expansion in Bend. Advanced manufacturing and distribution will be the continued hot sectors in Redmond, while Prineville and Crook County will see a mix of employment growth around ongoing data center development.