Carl Riccadonna, state chief economist and Michael Kennedy, senior economist of the Department of Administrative Services (DAS) Office of Economic Analysis (OEA), presented the latest economic outlook and revenue forecast to the Senate Committee on Finance and Revenue. The quarterly revenue forecasts serve to open the revenue forecasting process to public review and is the basis for much of the Oregon state government budgeting process.

What is different about this forecast?

The Office of Economic Analysis provides quarterly forecasts for the State of Oregon’s major revenue sources, including all sources contributing to the General Fund (Personal and Corporate Income Tax, etc.), Lottery and the Corporate Activity Tax. In May of odd years, OEA’s revenue forecast establishes the anticipated resource levels for the next biennium’s adopted budget.

The May 2025 economic outlook brings more uncertainty and slower growth as risk factors continue to widen. Key points include:

• The national economy was projected to grow 2% for 2025 in the previous forecast; that growth is now projected to be 0.8%, less than half the original estimate.

• The outlook is now characterized as sluggish growth, a significant slowing in economic growth that results in a rising unemployment rate. This is distinct from a recession, which is characterized as a broad-based decline in economic activity. The probability of recession is currently estimated by OEA at 25%.

• Oregon’s economy continues to be bound to national trends for growth and inflation.

• Oregon’s heightened sensitivity to trade has a direct impact on personal income taxes and state labor trends although less of an impact on corporate taxes.

Revenue Forecast

The May revenue forecast projects the 2023-25 General Fund ending balance to be $2.17 billion, with revenues decreasing by $162.3 million.

In the 2025-27 biennium, General Fund revenues decreasing by $337 million from the March forecast.

About the Office of Economic Analysis

The state chief economist oversees the Office of Economic Analysis within the Department of Administrative Services and provides objective forecasts of the state’s economy, revenue, populations, corrections population and Youth Authority population. These forecasts are used across state government, and by the public for a variety of reasons, notably to inform the state budgeting process. For more information about the Office of Economic Analysis and recent forecasts visit https://www.oregon.gov/das/oea/pages/index.aspx.

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