Traffic to local businesses in downtown Ontario was sparse in April of Covid-19 virus restrictions. (The Enterprise/Pat Caldwell)

The months ahead for Oregon’s employers and workers will be the “most challenging yet” as consumers remain cautious and the U.S. awaits distribution of coronavirus vaccines, according to a state economic forecast.

The impact of the pandemic remains uneven among workers and key business sectors. State economists say Oregon could see “very strong growth starting late in 2021” if consumer confidence to shop and eat returns.

Still, industry and labor won’t return to health until summer 2023 under current conditions, the report said.

State economists projected the fate of Oregon’s economy as part of their quarterly forecast for how state government revenues will track. The latest report was issued Nov. 18.

A widely available vaccine against Covid will be key to the state’s recovery.

“Provided they truly are effective and can get produced and distributed fairly quickly, the state is set for a strong recovering starting in a few months,” state economist Josh Lehner said in an email Saturday.

The state’s report cited a few bright spots, such as an expanded workforce in e-commerce and a strong demand for housing.

But the economists found that Oregon industry otherwise remains well behind in total employment, and businesses such as restaurants and small retailers “have yet to regain even half of their losses from earlier this year,” the report said.

The report was issued before Gov. Kate Brown announced she was imposing new risk categories that would leave restaurants and some businesses restrained through December. The extended “pause” is expected to leave more Oregonians unemployed or working fewer hours.

“Low-wage workers in consumer-facing industries like retail, leisure and hospitality and other services (barber shops, nail salons, etc.) have borne the brunt of the recession,” the report said.

The report noted that in October, 55,000 Oregonians had been out of work for at least six months. That’s four times the pre-pandemic rate.

“The longer the spell of unemployment lasts, the lower the probability of finding a job and the higher probability of dropping out of the labor force entirely,” the report.

It noted that on the day after Christmas thousands of Oregonians will lose income when extended unemployment programs run out.

Inaction by Congress on renewing such programs could add to Oregon’s misery, the report said.

“When the weak labor market and spreading virus is combined with months of federal inaction regarding both the pandemic and the economy, it brings recovery to its most challenging point yet,” the economists wrote.

Getting Oregon’s economy moving again is based in part on “whether or not consumers feel confident enough in their ability to safely resume activities,” the report said.

Lehner said that “the recent wave of Covid cases is likely to see consumers pull back out of hesitation and fear.”

That can particularly harm small businesses that “tend to lack sizable reserves, access to capital markets like large businesses and at times even traditional banking relationships,” the report said. It noted that while some businesses have closed, “the initial impact is not as bad as feared or least not yet.”

The report said that total U.S. personal income is higher now than before the pandemic and that high-income Oregonians are faring well. They have seen their net worth increase because of climbing home prices and record levels in the stock market.

For Oregon, that means a growing gap among households in income levels, the report said. Low-wage earners who are out of work are losing ground because when they return to their jobs, the cost of homes and other assets will have gone up, making them less affordable.

In its industry-by-industry review, the report said that e-commerce and home construction “have seen demand rebound strongly this year. A handful of industries, accounting for around 1 in 8 jobs statewide, actually have higher levels of employment than a year ago.”

E-commerce and related industries such as warehousing added 6,000 jobs.

“Home improvement stores are up 10% and transportation and warehousing are up about 6%,” according to the report.

Brick-and-mortar retailers, meantime, have cut nearly 5,000 jobs and “are unlikely to fully regain all of their recessionary losses anytime soon, if at all.”

The report said restaurants and theaters that were allowed to reopen over the summer “have yet to regain even half of their losses from earlier in the year,” an assessment made before the most recent pause and the authority for restaurants to provide outdoor dining.

In manufacturing, Oregon is faring worse than the rest of the country as companies close or reduce their work forces.

“Expectations are that manufacturing employment will not pick up noticeably until next summer,” the report said.

The report found, though, that the “hot” housing market has resulted in strong employment in the logging industry.

The closure of schools is rippling through the state economy, the report found. It said the education Oregon students are getting now is “potentially less effective” and puts a strain on families.

“Distance learning has put parents in a bind,” the report said. “Nearly 1 in 5 Oregonians in the workforce meet the following definition: They have children, work in a job that cannot be done from home, and do not have another non-working adult present in the household.”

The report said the pandemic could “entirely undo” gains seen of mothers returning to Oregon’s workforce in recent years.

The report noted that the majority of elementary and middle school teachers are women and that losses in education jobs have been most profound among substitute teachers.

“The large decline in the number of teachers is mostly about schools not using substitute teachers with online learning,” the report said, which projected that a full return to classrooms wouldn’t happen until fall 2021.

Contact editor Les Zaitz by email at [email protected]

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