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Recession scars are healing, economist says Tim Duy Thursday Jan 25, 2018 at 6:16 PM Jan 25, 2018 at 6:16 PM Greg Stiles Mail Tribune @GregMTBusiness Here and elsewhere, the economy is showing more signs of vigor. University of Oregon economist Tim Duy said the current expansion that began in 2009 is beginning to look like ancient history and could surpass the 120-month expansion that ended in March 2001. "For several years, many people underestimated the fundamental resilience of the U.S. economy," Duy told a sellout gathering at the 15th Southern Oregon Business Conference Thursday at the Inn at the Commons. After the shock of the financial crisis, many people simply saw the underlying national economy as fragile, Duy said. News clippings and commentaries note the economy was one step from another downfall. "The reality is very much different," he said, pointing out economic expansion has gained speed in each of the past three quarters. "It's almost gaining a second wind." The weak spot, he said, has been investment. "People were scarred by the Great Recession," Duy said. "But we're moving so far past the recession that those scars are healing and people are now willing to take risk because this looks like a very sustainable recovery." Business owners who worried the recovery would end now find they have to invest in order to keep up with customer demand. "We see reports coming in showing firms are really champing at the bit and this is a good time to expand," he said. "It could be the supply side of the economy coming back to life, and I'm optimistic we're starting to see that." In an interview earlier in the day, Duy said the best way to rein in Oregon's surging housing costs is to build faster. "We haven't found very effective ways to increase the capacity of our industry to generate the housing supply," Duy said. "Whether it be that we need more dense types of housing that have yet to be developed en masse or that we have the easily available land to increase single-family housing. I tend to think we need to find ways to increase the density of our new housing stock, and also increase the density of our existing neighborhoods." He added that it would not be healthy for higher wages to simply flow directly into housing. Among the surprising trends emerging after nearly nine years of recovery is a low inflation rate. "As we got to lower and lower unemployment rates there was a widespread expectation we'd see wage growth and more inflation, and that hasn't been the case," Duy said. "That suggests some good dynamics are at work, in that we can push unemployment much lower than we had thought without generating any sort of instabilities in the economy. "That's good because when we get unemployment down to a low point — and especially if we can hold it at a low point for a sustained period of time — it will bring more and more workers into the labor market that were maybe locked out of the labor market in previous years. In the process we can give them a skill set that will make them more valuable and productive and consistent workers in the future." The Rogue Valley is a prime location for businesses in Seattle, the Bay Area and even Portland to find respite from stratospheric costs, he said. "To the extent firms can relocate or develop expansion opportunities in cheaper locations, Southern Oregon should offer some positive benefits," Duy said. "You have a lot of solid transportation amenities between the highway system and airport. I think those could be leveraged." While some companies wouldn't consider the move, second-tier businesses would benefit. Medford airport's growth is indicative of economic strength. "I don't think you can overestimate the impact of strong transportation networks to the rest of the world and the value they bring to the rest of the community." — Reach reporter Greg Stiles at 541-776-4463 or [email protected]. Follow him on Twitter at www.twitter.com/GregMTBusiness or www.facebook.com/greg.stiles.31.