By Emily Wood
 
November 16, 2009
 
SALEM, Ore. - Millions of Americans and businesses are fighting to stay afloat in the deflated economy.
 
Oregon's unemployment numbers are holding steady, a sign that the recession is loosening its grip on the state. Nationwide, many economists say the recession is over as stocks jump and production is up.
 
Southern Oregon in particular has been hit hard. While jobs are still scarce and business revenue is low, some industry leaders say the only place to go from here is up.
 
State Economist Tom Potiowsky says Oregon's economy is bottoming out, which after over a year of spiraling down, is good news.
 
"Bottoming out is really that we're not falling like we were before... We had been skiing on black diamonds, now we're skiing on blue diamonds. This is a lot easier, not as steep, but we're still not out of the chairlifts," State Economist Tom Potiowsky said.
 
Unemployment numbers in Southern Oregon counties are still in double digits. In September, Jackson County's unemployment rate dropped to 12.4 percent from an even 13-percent in August. In September of 2008 unemployment was at 8.1 percent. Josephine County unemployment held steady at 14.2 percent, down slightly from 14.9 in August. It was at 9.4 percent in September of 2008. In Klamath County unemployment dropped slightly from 14.9 to 14.6 percent. This time last year it was 10 percent.
 
"Things are starting to stabilize a little bit, now that's the good news. The bad news is that you're at the bottom of this so you're at the height of the job losses, probably the height of the unemployment rate," Potiowsky said.
 
One of the largest employers in Southern Oregon, Medford-based gourmet food and gift giant Harry and David, is $245 million in debt. In January this year the company cut 10 percent of its full and part time employees. Earlier this month the company reported a 12 percent decrease in sales for the 1Q of the 2010 fiscal year.
The company lost more than $20 million in its 2009 fiscal year and says it's hiring fewer seasonal workers this year than last.
 
Another Southern Oregon company, Lithia Motors, is also feeling the economic pinch. While the company lost a number of dealerships across the country earlier this year, things are turning around thanks to government incentive programs like Cash for Clunkers.
 
Last month, Lithia turned a profit of more than $5 million in the 3Q and is now focusing on acquiring new stores to drive profitable growth.
 
"Lithia is a company that can buy under-performing stores and turn them into winners. So we will be finding those stores where we see the potential," said Lithia CEO Sid DeBoer in a conference call.
 
State economists say the timber industry has been the hardest hit, especially in Southern Oregon, where there is only one saw mill open in Jackson and Josephine County.
 
"The timber business and the sawmill business has been a volatile one for all, all the time. This recession is probably the worst one our family has experienced. I know, I've heard stories about bad recessions in the past, but everybody I know who's older than I am says this is the worst they've seen it. It sure feels like it on our end, its been a tough time," Rough and Ready Owner Jennifer Krauss Phillippi said.
 
Phillippi is a fourth generation owner of rough and ready.
 
"I think there's a glimmer of hope. We cut two kinds of product here. We cut Douglas-fir and we cut pine. And the pine goes to doors and windows plants, and that seems to be a little brighter lately," Phillippi said.
 
Rough and Ready currently employes 90 workers. At the company's height it employed 225.
 
"We're not going to curtail the week of Thanksgiving like we have the last couple of years. We're going to work through because orders are picking up. So we see that there is a glimmer at the end of the tunnel," Phillippi said.
 
With the timber industry faltering, the state is no longer depending on timber as the core of its economy, making way for a variety of businesses to take over.
 
"I've seen the local economy successfully transition from a timber based economy to a much more diversified economy," said John Lopez, Director of the Small Business Development Center in Josephine County.
 
He says the main problem businesses are facing is getting loans from banks. As more banks scrutinize the business, the person looking to take out a loan is also failing to qualify, which hurts real estate.
 
"I'd say business is off 30 percent probably," said Tim Donovan with Southern Oregon Real Estate... "The biggest problem is typical buyers that are starting out, a lot of them don't have jobs now. And until the job market improves the real estate market is going to be slow because people just can't qualify for loans."
 
Donovan believes the worst is over for Oregon's economy. In Jackson County, home sales are rising by double digits and the extended first-time home-buyer tax credit is boosting even more sales.
 
"I do believe the market has pretty much bottomed out here... it's going to be slow going, its not going to go up like it did in 2005, 2006, but I think we'll be OK," Donovan said.
 
"All recessions have one common characteristic: They all have come to an end and this one will too... it's just that this one has been a real dizzy of a one and its been very deep... Its going to be slow to come back, but all said and done, I don't have to tell Oregonians they still live in the best place in the world," Potiowsky said.