While the sub-prime crisis has exerted a drag on Portland's economy, it has certainly not brought the city to its knees.

Despite tightening credit conditions across the country, Portland was one of only three major metro areas in the U.S. where house prices increased on a year-over-year basis in December 2007. This information comes from the S&P/Case-Shiller Home Price Indices.

Having said this, two factors suggest that, while Portland has been able to weather the current slowdown better than most metro areas, it has not been able to avoid it entirely:

(1) The rate of increase in the Case-Shiller index has slowed from 22% year over year in December 2005 to 1% year over year in December 2007; and

(2) Single-family house construction has fallen by 46% year over year.

Sustained net in-migration and positive employment growth have helped to support housing demand in Portland over the past several quarters.

In the case of employment, significant increases occurred in accommodation and food services (+4.1%), education and health services (+3.4%), government services (+3.2%), information services (+1.7%), construction (+1.5%) and profession and business services (+1.4%).

Looking forward, although Portland's economy is likely to slow over the next several quarters, the metro area's economic health should be underpinned by a number of factors.

(1) According Drew Barton, Portland's chief economist, the city still has a high "crane index," indicating that a healthy volume of commercial and apartment construction is still underway in the metro area.

(2) Public investment in the expansion of the city's Metro rail system and its "Big Pipe" sewer tunnel will contribute to the metro area's economic growth over the next several years.

(3) The significant weakening in the U.S. dollar over the recent past has contributed to a significant improvement in the growth of Portland's exports, such as Intel computer chips.

(4) The metro area's economy should benefit from the growing demand for environmentally friendly technologies such as those produced at a recently opened solar panel manufacturing plant.