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NATIONAL ECONOMIC OUTLOOK <br /> <br /> 1Vote to readers: Much of this report's narrative in real wages continue to buffet the <br /> was written in the late summer time frame. Obviously spending power of households. <br /> the calamities that have since hit financial markets <br /> both here and increasingly abroad make the economic So, instead of the worst of the economic <br /> backdrop to our forecast somewhat impertinent. It is, <br /> nevertheless, airl consistent with the outlook rom the slowdown being behind us by now (as <br /> ~ Y f <br /> most recent State Economic Forecast (September, anticipated m our prior macro outlook), it <br /> 2008). looks presently like it is still ahead of us, <br /> stretching out to the late 2008 to early 2009 <br /> It has been roughly one year since the onset of time frame. The effect on travel demands <br /> the full-blown credit crisis buffeting our nationwide and on user tax revenues across <br /> financial markets, fueled by the housing the states will be for similar weakness. <br /> meltdown and the subsequent seizures in the <br /> money markets. While the list of headline while the prognosis for the precise juncture <br /> economic news events has been quite hefty when the economy starts to recover is <br /> thus far into 2008, some of the leading ones somewhat fluid, major job gains are absent <br /> insofar as Oregon's economy and the until the mid-to-late stages of 2009. Real <br /> demands on our highway and road system are: economic growth is anemic until the <br /> spring/summer of 2009, mimicking both <br /> • Unexpectedly, the nation's economy weakening consumer spending and weak <br /> managed to skirt recession in the first half business fixed investment spending -largely <br /> of this year, according to most industrial equipment and commercial <br /> conventional indicators (although there structures. Residential fixed investment (aka <br /> are some doubters who assert it may have "housing" and the Achilles heel of our <br /> actually begun late 2007). economy in the present cycle) stays quite <br /> weak nationwide overall and is sub-par into <br /> • Not surprisingly, the financial meltdown nearly 2011 before housing markets get back <br /> is becoming more contagious, to some semblance of vitality. <br /> necessitating unprecedented "innovations" <br /> by the both Federal Reserve and the Not only is the timing of the downturn, its <br /> Treasury to stop declining confidence in depth and duration somewhat uncertain at <br /> the credit markets from infecting present, the risks in the macro outlook for the <br /> deleteriously the "real" economy. pace of a rebound are complicated further by <br /> Federal Reserve monetary policy going <br /> • We saw crude oil prices shoot to record forward. <br /> levels by early summer, spawning demand <br /> destruction for transportation fuels of In reaction to the seizure in financial markets <br /> fairly significant proportions. last year (both here and abroad), the Fed <br /> initiated a somewhat belated campaign of <br /> • Consumer spending was buttressed lowering the fed funds rate, as well as <br /> momentarily by the federal fiscal stimulus introducing a variety of longer termed lending <br /> package this summer, but record high gas instruments to both conventional and, <br /> prices, as well as high CPI-inflation heretofore, unconventional financial <br /> overall, job losses and lackluster patterns institutions. Clearly, these initiatives were <br /> aimed at stemming any additional <br /> 1 <br /> <br />