SALEM — Oregon’s latest economic forecast gives Salem businesses a mixed message: the state economy is slowing, but the local labor market is still showing signs of resilience.
The state’s June Economic and Revenue Forecast, released May 20 by the Oregon Office of Economic Analysis, shows Oregon continuing to lag national growth as higher energy costs, inflation pressure and softer labor conditions weigh on the 2026 outlook. At the same time, state General Fund revenue is projected $345 million higher than the previous forecast, largely because of 2026 legislative tax changes and fund transfers.
For Salem and the wider Marion-Polk economy, the picture is not as weak as the statewide headline suggests. The Salem metropolitan statistical area, which includes Marion and Polk counties, posted a seasonally adjusted unemployment rate of 4.9% in April, down slightly from 5.0% in March but still above 4.4% a year earlier. In raw numbers, the Salem-area labor force stood at 226,281 people, with 216,017 employed and 10,264 unemployed.
The local job market also has more momentum than much of Oregon. Salem-area seasonally adjusted nonfarm employment was up 3,100 jobs over the year, a 1.7% increase. A December Oregon Employment Department report showed the Salem area was one of the stronger job-growth markets in the state, with Marion and Polk employment growing while many counties lost ground. At SEDCOR’s April Mid-Valley Economic Summit, Business Oregon economist Damon Runberg presented Salem-focused data as part of a broader discussion on where the Mid-Valley fits in Oregon’s economic outlook.
The growth is uneven. Transportation, warehousing and utilities added 3,200 jobs over the year, while local government added 1,100. Health care and social assistance also gained 700 jobs. But retail trade was down 400 jobs, leisure and hospitality was down 600, professional and business services was down 800, and construction was down 200 from a year earlier.
That unevenness matters for business owners. Salem’s average weekly wage was $1,246 in the third quarter of 2025, below the national average of $1,459. That means higher costs for fuel, food, housing and borrowing can hit local workers and consumer-facing businesses harder, even when employment numbers look stable.
Salem’s role as the state capital also makes its economy different from markets driven more heavily by tech or tourism. Government accounted for 47,200 of Salem’s 191,400 nonfarm payroll jobs in April, including 23,800 state government jobs and 22,000 local government jobs. That public-sector base can help stabilize the local economy when private hiring slows.
The timing is important. Salem’s Budget Committee began reviewing the proposed FY2027 city budget in April, and the City Council is scheduled to adopt the city and Urban Renewal Agency budgets on June 22. Those decisions will shape near-term spending on infrastructure, services and capital improvements.
The forecast is not a green light or a red flag. It is a yellow light. Salem businesses are not facing a collapse, but they are operating in an economy where growth is slower, costs remain high and local strength depends heavily on a few stabilizing sectors.