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By Emily Boyd, Government Affairs Manager, Bend Chamber
Earlier this week, the Oregon Office of Economic Analysis (OEA) released its Q1 2026 Economic and Revenue Forecast. This forecast will guide any budget rebalancing decisions the Legislature makes during the 2026 session, so it is an important one to watch. The Chamber follows these quarterly forecasts as they are a strong indicator of our state’s economic health as well as a guidepost for the state budgeting process.
At the national level, the outlook continues to improve. GDP is holding steady at around 2.1%, inflation is easing to 2.7%, and the risk of a recession has dropped from 25% to 20%. Much of that momentum is being driven by fiscal stimulus tied to H.R. 1, tax relief, lower interest rates, and more clarity around tariffs. There is also strong investment activity in areas like tech, AI, and data centers.
Oregon, however, continues to lag much of the country. While economic development activity has shown real resilience and is carrying into 2026, the state appears to be at an inflection point. Oregon’s year-over-year real GDP growth came in at 4.4%, compared to 4.7% nationally. Payroll growth remains flat to slightly negative, something that is typically seen during recessions.
Job trends are especially concerning in the private sector. Over the past year, Oregon lost roughly 9,200 jobs, including more than 5,000 in manufacturing alone. Only health care and social assistance, leisure and hospitality, and other services posted gains - and leisure and hospitality are still just climbing back to pre-pandemic levels. Employers are in a “low hire, low fire” mode right now; unemployment is leveling off, and inflation remains stubborn. While productivity and output are improving, labor trends are not, which is due in part to ongoing technology adoption.
Population growth continues to be another headwind. Oregon is projected to grow at just 0.5% annually through 2035, and because the state relies heavily on in-migration, policy choices around housing affordability, taxes, workforce readiness, and education outcomes will matter more than ever. If Oregon wants to attract and retain working-age talent, we need to stay focused on competitiveness.
On the revenue side, there is better news. Stronger-than-expected corporate tax collections led economists to increase the General Fund revenue forecast by $105.6 million. As a result, the 2025–27 biennium is now projected to end with a positive balance of $197.9 million - a $261.1 million swing from the last forecast.
With the budget back in the black, conversations about raising taxes on employers or individuals should be off the table. Oregon businesses have already seen their effective tax burden rise by 33% between 2019 and 2023. What businesses need now is certainty and stability. Continued alignment with federal tax provisions under H.R. 1, especially business expenses, help employers reinvest, expand operations, increase wages and benefits, and create jobs.
As the Legislature looks ahead, there is also an opportunity to rebalance the budget by phasing outdated programs and those created with one-time pandemic funding. Oregon has successfully navigated tougher fiscal challenges in the past without raising taxes, and those decisions helped fuel the strong economic growth of the 2010s.
You can read the full Economic and Revenue forecast report here.
The Chamber will remain watchful of the legislative and budgeting process during this short session and continue to advocate for policies focused on growing our economy and creating an environment for businesses to thrive. Please feel to reach out to the Chamber’s government affairs team with questions.
