State Economic Watch

Economists from the University of Michigan say that while they believe the state’s economy “has hit a growth pause” that will last into 2026, they expect growth to return in 2027. In the recently released Michigan Economic Outlook 2026-2027 , the economists project a loss of 2,000 jobs for the state in 2026, but a gain of 11,300 jobs in 2027. The improvement in 2027 payrolls is based on the projected stimulative effect of enacted tax cuts, anticipated reductions in interest rates, and “a more supportive policy mix”. The report goes into considerable detail about the impact of both federal tariff and trade policy and regulatory changes on the state’s auto industry. It notes that while some of these changes, particularly those around CAFE standards and EV credits, may be beneficial to the industry in the short term, the future direction of these federal policies is uncertain. 

Today’s release of the Federal Reserve’s Beige Book really wasn’t worth the wait. The twelve Federal Reserve Districts reported little change in economic activity since the previous publication. Districts reported either slight increases or slight decreases in economic conditions, but on balance, nothing in the way of significant movement one way or the other. Labor markets remained sluggish across all districts and consumer spending continued to be under pressure. Price pressures continued to hurt both businesses and consumers. A few districts noted auto manufacturing difficulties due to supply shortages. Agricultural sectors remained stressed but some producers expressed optimism that crop prices would increase and that trade tensions would moderate.

New quarterly statistics from the Federal Housing Finance Agency (FHFA) corroborate the regional and national data contained in the most recent Case-Shiller report.  The FHFA House Price Index (HPI) report indicates that the y/y growth in house prices nationally continued to decline in 3Q2025. The national Purchase-Only FHFA HPI (SA, nominal) increased 2.2% y/y in the quarter. The y/y rate of growth in the index has generally been on the decline since its recent peak of 18.2% in 1Q2022. Similar to the Case-Shiller report, the strongest y/y growth in house prices was primarily seen in Northeastern and urban Midwestern markets with Illinois, New York, North Dakota, New Jersey and Connecticut comprising the top five growth rate states. Conversely, Florida, Colorado, Vermont, California, and Arizona saw the weakest y/y growth rates, with all posting declines in their respective HPI indexes.

The gains in housing prices nationally continued to decelerate in September 2025, with the S&P Cotality Case-Shiller National Composite Index posting its lowest y/y increase since “mid-2023”. However, the underlying data confirms a continued divergence between the Northeastern and urban Midwestern housing markets and the Sun Belt markets. According to the newly released data, the top markets in terms of y/y home price appreciation were Chicago (5.45%, nsa), New York (5.25%), Boston (4.12%) and Cleveland (4.02%). Conversely, the weakest markets were all in Sun Belt regions with Tampa down -4.14% y/y, Phoenix down -2.02%, Dallas down -1.33%, and Miami down -1.26%. It is notable however, that on a m/m basis, all 20 metro areas tracked by the Case-Shiller Index, registered declines in September 2025. In August, only Chicago registered a slight 0.2% m/m increase.

In a new public opinion survey conducted by Public Opinion Strategies, two-thirds of Oregonians believe that the state’s economy is “pretty seriously off on the wrong track”. The results of the survey are pretty grim, with most respondents pointing to the cost of living, onerous regulatory environment, homelessness, taxes and housing costs as factors influencing their views. To be fair, recent large scale layoffs, primarily from tech companies, are likely having a dampening effect on public opinion, but nevertheless, the fact that the majority of respondents indicated that they would consider relocating to another state for employment opportunities is somewhat striking.

In the December release of the quarterly Oregon Economic Forecast , state economist Carl Riccadonna projects moderate growth in the state’s economy in 2026 after a modest contraction in 2025. His base case calls for employment growth in 2026 of 0.5% after a decline of -0.3% in 2025, and for state personal income growth of 5.6% compared to 4.3% in 2025. Notably, he assigns a 60% probability to the baseline, which is a three percentage point upgrade from the previous quarterly forecast.  Significant factors underpinning the forecast include stimulus from the federal OBBB Act, continued easing of Federal Reserve monetary policy, and the potential for some easing of current US tariffs, particularly those associated with Canada and Mexico.