The Boomtown Economy
I spend a decent amount of time traveling around the U.S. speaking at conferences and visiting clients. Doing this is a visceral form of economic research -- you can see just how various regions are recovering and expanding with your own eyes.
It doesn't take much to realize that, to paraphrase science fiction writer William Gibson, the recovery is here, it just isn't evenly distributed.
The variations are based on three factors: education, region and industry. Last year, I cited these as the key drivers of why some folks think this is a terrible recovery and others believe it is strong. The answer depends upon what sort of diploma you have, where you live and what industry you work in. My Bloomberg View colleague Justin Fox has written about this, noting that despite the strong overall job market in the U.S., “six states saw payroll employment decline over the 12 months ending in January.”
If you are in the wrong place, doing the wrong thing, with the wrong background, you are very likely to be unhappy with this economy.
I thought a good deal about this during the past week while visiting Portland, Oregon, which I can only describe as a boomtown. Portland is one of the 20 fastest growing cities in the U.S. From the third quarter of 2014 to the same period in 2015, Oregon had the greatest gains of any state in economic health, according to an index created by Bloomberg. The locals I spoke with told me that for several years after the recession ended the recovery was moving along modestly, but that during the past two years the regional economy has surged.
The unemployment rate in the Portland metro area, according to Bureau of Labor Statistics data, is 4.1 percent, a level not seen since 1995. Compare that to 4.9 percent for the entire country, and 5.1 percent for the state overall. Meanwhile in both 2014 and 2015, more people moved to Oregon than any other state, according to a study by United Van Lines. Contrast Portland's population growth of about 5.3 percent during the past five years with the U.S. rate of 0.7 percent for the same period, according to World Bank projections.
On the ground, the evidence of the Portland boom stares you in the face. Cranes at construction sites for apartment buildings dot the skyline; historic industrial buildings are being converted into restaurants, theaters and condos; and there's lots of traffic, that telltale marker of urban prosperity. For better or worse, gentrification is occurring, just as it has in Seattle, Brooklyn, Washington and many other boomtowns.
Portland is located between Seattle, where Microsoft and Amazon are based, and San Francisco, the epicenter of tech (though Seattle is much closer). The city has its own tech and startup scene. I was amused to discover that our Portland office is two floors above Smarsh, a fast-growing company that archives all of our e-mail, texts and social media as part of our compliance practice. The startup and entrepreneurial community is small compared with San Francisco, but it's rapidly expanding.
And the Portland area has its own homegrown corporate powers, including Nike, which started as a maker of shoes for hard-core runners and now is as much a fashion house as a technology company.
Like Washington and Colorado, Oregon has passed a law allowing recreational use of marijuana. There are more than 90 stores that sell marijuana in Portland, and all of them seemed to be quite busy (I went into a few, but only for purposes of unadulterated economic research.) It's worth noting that all of these states have done better than average in many measures of economic well-being, according to data compiled by Bloomberg.
I would be remiss if I didn't mention the inherent bias in my sample set. My work means I tend to interact with institutional investors, high net-worth individuals and corporate retirement-plan sponsors. That creates a bias as to what parts of the country I spend time in -- they tend to be wealthier, with lots of financially successful businesses and individuals. If I am visiting your city, it probably means the recovery there is good. In other words, the places I tend to visit -- Portland included -- are probably not representative of many parts of the country.
But for those who insist that there is no recovery or that we are slipping back into recession, I urge you to get out of your offices. More analysts, economists and strategists should do this, since spreadsheets often fail to capture some of the nuances specific to each region. Views that are predicated on national averages are incomplete at best.
Get out and see the world. It will help you spot the recovery.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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