Editor’s note: This story is part of a series looking at what voters say are the biggest problems facing Oregon right now, and what Oregon’s next governor might do about them.

Oregon voters aren’t happy about much these days, so it’s no surprise that a survey commissioned by OPB showed deep misgivings about the condition of the state’s economy.

Nearly two-thirds of voters rated Oregon’s economic conditions as “poor” or “very poor” in the survey, and nearly as many said they expect things to get worse.

Those opinions are partly informed by voters’ personal politics — Republicans were far more apt to report the economy was in bad shape than Democrats, who have largely controlled the state for decades. Even so, almost half of Democrats surveyed reported they feel the economy is lagging.

How would you rate economic conditions in Oregon today?

Source: DHM Research survey of likely Oregon voters, margin of error +/-4%

That pessimism has been picked up by candidates in this year’s highly competitive governor’s race, some of whom are pledging to loosen regulation on businesses and take a major swing at easing the state’s rising housing costs.

Talk to Oregon economists, though, and the dour mood is harder to find. After a calamitous plunge at the outset of the COVID-19 pandemic, many key indicators of the state economy are surging back.

“In our lifetimes — in our parents’ lifetimes — we never saw an economy as bad as 2020,” said Christian Kaylor, an economist with the Oregon Employment Department. “And the good news is: In our lifetimes we’ve never seen an economy as good as 2021.”

Kaylor rattled off facts that have helped him reach that conclusion.

The state’s unemployment rate sits at 3.8%, not too far off the 3.5% level of just before the pandemic, and a far cry from the devastating 13.3% unemployment rate in April 2020. After getting a slower start than some other states, Oregon added jobs at a faster clip than nearly any other state last year. The Portland region, which accounts for more than half of the state’s economy, also outperformed most other large metro areas in jobs added.

Economists now expect the state’s economy will have made a full recovery by the end of this year. And at the end of that recovery, the wages of many Oregonians will be well higher than they were at the pandemic’s outset.

“The economy is overheating”

But those indicators don’t account for the pain people are feeling. Kaylor and other economists say the super-fast rebound from the pit of recession amounts to an “overheating” economy. Many Oregonians — and Americans in general — have ample discretionary money to spend and an appetite to buy, they say. That ready cash, combined with supply-chain snarls and old-fashioned corporate greed, has helped lead to a nearly 8% increase in prices in the last year, the biggest jump in four decades.

“There’s just a lot of people with a lot of capacity to spend money right now,” said Tim Duy, an economics professor at the University of Oregon and director of the Oregon Economic Forum. “The economy is overheating. We’re seeing that in the rate of strong wage growth, but overall we’re seeing it in inflation as well.”

Price increases brought on by inflation have begun to outstrip higher wages, meaning the average worker effectively took a pay cut last year despite making more. The hospitality industry, severely hurt by the pandemic, is still lagging. A tight housing market has led to higher rents and bidding wars for limited homes on the market. Portland has trailed peer cities in its recovery. The price for filling up at the pump has become more and more painful — and the Russian invasion of Ukraine has not helped.

Despite the good things happening in Oregon’s economy, voters like Penny McCarthy are more often feeling the bad.

How would you say economic conditions in Oregon are changing?

Source: DHM Research survey of likely Oregon voters, margin of error +/-4%

“Gas prices are up, food prices are up, real estate is totally out of control,” said McCarthy, a 68-year-old Lebanon resident who labels herself a progressive Democrat. “It’s unreal.”

McCarthy lives off of Social Security benefits, and her husband, a disabled veteran, also receives payments. With their rising rent threatening to eat up more of their checks, the couple struggled to find a manufactured home that would offer more stability. They finally got lucky, McCarthy said.

“We live in a 1985 manufactured home that we fought to purchase,” she said. “We had to work for a year to find a house we could afford because rent is just horrible. I don’t know how people can afford that, and it’s only going to get worse unless something happens to rein it in.”

McCarthy has plenty of company. More than 60% of voters in OPB’s survey deemed the cost of living in the state a “very serious” issue, putting it in the realm of violent crime, homelessness, and addiction as a leading concern. And while early on in the pandemic younger Oregonians were most likely to express worry about their personal finances, polling shows that older Oregonians like McCarthy now lead the way in worrying about money.

“That dynamic is changing in a way that I think will be electorally powerful,” said John Horvick of DHM Research, which conducted the poll for OPB, noting that older voters are more likely than younger ones to participate in the May primary.

How worried, or not, are you about your personal financial situation?

Source: DHM Research survey of likely Oregon voters, margin of error +/-4%

Voters, of course, are well known for weighing their pocketbooks while casting ballots. But as the state prepares to elect a new governor this year, economists suggest that the forces at play in Oregon are often the result of larger trends that even the state’s top executive has little power to sway.

“The standard economic data look pretty darn good aside from inflation,” said Josh Lehner, an economist with the state’s Office of Economic Analysis. “There’s not a lot you can do at the state level about inflation.”

Duy, at the University of Oregon, agreed, saying that many forces battering Oregonians are driven by business cycles that play out on the national level. “You often have limited capacity around them,” he said.

Candidates weigh in

Still, the state’s next governor and Legislature will have a say in two areas Duy says can be meaningful: how the state taxes its businesses and citizens, and the kinds of regulations that exist.

Gov. Kate Brown, like many of her contemporaries around the country, demonstrated a powerful example of just how significant an impact governors can have on a state’s economy by issuing an executive order limiting business activity at the outset of the pandemic, then again in the face of the Delta surge.

“We dropped further and our initial recovery was a little bit slower,” Lehner said. “That’s’ because we were among the states that had a second round of shutdowns. That second round did have an economic impact but it also had a positive public health impact.”

A number of this year’s gubernatorial hopefuls have rested their platform on Brown’s handling of the coronavirus. GOP candidates like Sandy Mayor Stan Pulliam and Baker City Mayor Kerry McQuisten urged businesses in their towns to refuse to abide by COVID restrictions and found the rhetoric, and the national attention that came with it was a potent way to energize supporters.

“The number one lesson from the pandemic is to see just how easy it is for our individual rights and liberties to be taken from us,” Pulliam wrote in his responses to an OPB candidate questionnaire.

Under Brown, businesses have also bristled at new regulations that require entities to pay for their carbon dioxide emissions, saying the policies will needlessly hike costs. Republican candidates for governor pan a new business tax that resulted in billions of more dollars for public schools, arguing it reduces the ability of Oregon businesses to compete.

On economic issues, would you prefer Oregon’s next governor to be?

Source: DHM Research survey of likely Oregon voters, margin of error +/-4%

“The government never creates jobs,” Pulliam said. “It can only create the environment for the marketplace to flourish and create jobs on its own.”

Most gubernatorial candidates are focused less on job creation than on what voters agree is the number one issue Oregon faces: a homeless crisis that is intertwined with a lack of affordable housing options. Economists point out that state policies speeding the creation of new housing stock could help ease a painfully tight market.

Democratic candidate Tina Kotek, the former longtime state House speaker, has pledged to dig the state out of its housing shortage — currently at more than 100,000 units — by 2033, a decade after she would take office. She has not offered many specifics on how she’d do so.

“We … need to address the root causes of the crisis by ensuring affordable housing options for Oregonians, building more homes to meet the needs of our growing communities, and getting Oregonians the resources and support to remain stable,” Kotek said. " As Governor, I will move Oregon forward on meeting both the immediate challenges and tackling the root causes of this crisis.”

Jessica Gomez, a Republican from Medford who runs a microchip manufacturing company, has said she’d use a “market-based strategy to ensure housing is more plentiful and affordable.” That would include making it easier to expand urban growth boundaries that limit building on farmland, Gomez said, along with reducing fees and eliminating some regulations for homebuilders.

“The fact that the cost of housing in Oregon is much higher than the national average shouldn’t surprise anyone — Oregon has spent decades enacting numerous laws, regulations, and taxes that have driven up the cost of housing,” Gomez said.

State Treasurer Tobias Read, a Democrat also pursuing the governorship, has offered a similar take, saying he’d push to “cut through the bureaucracy surrounding zoning and building to aggressively address this shortfall in housing options.

“This is no time for red tape,” Read said. “Hundreds of millions of dollars have been allocated to solve these challenges, and we’re not getting the results we need.”

But even changes to all of those things would not cure inflation, which state governments are powerless to stop. That’s a job left largely up to the Federal Reserve, which has begun raising interest rates in order to cool the economy but risks sending the country into a recession if it moves too strongly.

State economists now say such a “boom-bust” scenario is a plausible alternative to their baseline assumptions that steady, but slower, economic expansion will most likely continue in coming years. Under such a scenario, laid out in the state’s most recent economic forecast, rising interest rates would result in a “relatively long-lasting recession” beginning early next year, costing the state roughly 100,000 jobs.

Lehner cautioned that such a scenario is far from certain.

“Our advisers think that is the most likely alternative scenario,” he said. “Does that mean we need to be worried today? No.”

In fact, Lehner’s predictions have more frequently been sunnier, as when he wrote at length in December about how fully Portland is likely to recover from a downturn brought on by the pandemic, political violence and growing homelessness.

“The outlook is bright,” Lehner wrote. “Already the region has caught up economically to other large metro areas despite local social challenges and public perception. However, the key question is whether or not Portland will reclaim its perch among the highest fliers around the country, which remains to be seen.”