Oregon’s economic forecast took a dramatic turn for the worse in recent weeks. State economists project the state will experience an $888 million revenue shortfall over the next two years due to federal tariffs and spending policies, erasing what once appeared to be a comfortable budget surplus.
In July 2025, Oregon lawmakers set aside $472 million from the state’s general fund to buffer expected revenue losses. However, that amount covers only slightly more than half of the anticipated shortfall, leaving state agencies and policymakers scrambling to adjust spending plans.
“Last time I was here saying we’ve created 25,000 jobs over the last year. Now I have to share the unfortunate news that we’ve lost 25,000 jobs over the last year,” said Carl Riccadonna, Oregon’s chief economist, during testimony to state revenue committees.
Manufacturing, trade, transportation, professional services, business services, and construction sectors have borne the brunt of economic contraction. The unemployment rate is expected to rise as businesses adjust to tariff pressures and consumer uncertainty dampens spending.
State economists also raised concerns about potential recession within the next 12 months, citing economic growth projections of just 0.8% for 2025, down from earlier forecasts of 2%. The analysis likened the slowing economy to “a jumbo jet losing altitude.”
Despite challenges, some bright spots remain. The University of Oregon contributes $3.7 billion annually to Oregon’s economy—approximately 1% of total state economic output, according to a 2025 analysis by the Parker Strategy Group. One of every 100 jobs in Oregon is tied to the university, demonstrating the importance of higher education and research institutions to regional economic stability.
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