Fresh from Wall Street, state economist Carl Riccadonna says he’ll work to bring Oregon’s revenue forecasts in line with reality.
Despite a nervous national mood, Oregon’s new state economist wants residents to know things aren’t all bad.
The labor market has proven resilient. Job growth has been deep, in the state and nationally. Wages are outpacing inflation. Despite gloomy projections, policymakers seem to have pulled off a soft landing after COVID without hitting a recession.
“I think there’s an important constructive economic message we need to stay focused on,” Carl Riccadonna tells Oregon Business, “despite some negative headlines.”
In September, Riccadonna replaced Josh Lehner, a longtime state staffer serving as state economist on an interim basis. Both Lehner and the previous state economist, Mark McMullen, left in 2024 for jobs in the private sector. Now, Riccadonna, 46, will try to bring his years on Wall Street to bear on the Oregon system. Over 24 years, the father of three worked as an economist for Deutsche Bank, Bloomberg and BNP Paribas. He tells OB he was looking for a change.
“I have some connections to the state and I always loved it every time I came out here,” he says. “It’s certainly a great place to raise a family.”
The state economist is a low-profile job with a major impact. The job calls for unbiased, politically neutral analysis of national and state economies. Among their primary duties in Oregon, they perform the highway cost analysis and healthcare needs assessment. But objective number one is the quarterly revenue forecasts that provides the basis for the budgets of the governor and the legislature.
Riccadonna hopes to improve forecasting so lawmakers have a more accurate picture of available funds at the start of each two-year budget cycle. He’s reluctant to disparage his predecessors at the office. Economic forecasting in Oregon is already challenging due to the two-year budget cycle and the large portion of revenue its draws from personal income taxes, which can fluctuate widely from year to year.
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“I wouldn’t say we’re changing anything, or bringing in new methods. It’s more a continuous quality improvement,” Riccadonna says. “In any forecasting role — and this was true in the private sector, as well — you’re always looking back over your shoulder and saying, ‘What could I have done differently? What could have been better now that I know the end result?’”
For Riccadonna, this means adapting Oregon’s forecast to catch things prior forecasts missed. For one, prior national and state economic mapping was overly pessimistic, he says. Most economic forecasters thought when the pandemic hit, the country was headed for a deep and prolonged recession, or worse.
“There are few instances in history where the economy overheats the way ours did post-pandemic … and it doesn’t end up in recession,” Riccadonna says.
The other adjustment concerns Oregon’s unique “kicker” tax rebate. Under state law, if revenue comes in more than 2% under the state economist’s projection, a portion of the excess is “kicked” back to taxpayers. Somewhat controversially, the state economist’s forecasts have led to a string of kickers stretching back 10 years with a total of $11 billion refunded in that time. This has led to questions about the economist’s office’s accuracy and independence. Additionally, the large kickers have left less money to fund other priorities like education and health care.
As economist Michael Kennedy explains, the way kickers have been forecast caused distortion in the state’s revenue forecasting. The problem became more acute when the state stopped mailing physical checks to taxpayers and started awarding kicker payouts as income tax credits. The bigger the kickers got, the more distortion they caused, until they became a “self-fulfilling prophecy.”
“What happens when you have larger and larger kickers, you get a disconnect between what you’re modeling and the actual collections,” Kennedy says. “Collections were coming in a lot lower and you end up with this disconnect that gets worse and worse as the kickers get bigger and bigger, particularly when a kicker is $5.6 billion.”
Kennedy retired earlier this year after 22 years with the office but was asked to rejoin for Riccadonna’s transition to provide continuity and bridge the gap.
Despite talk of smaller kickers, the state economist’s latest quarterly forecast last month — Riccadonna’s first as state economist — actually calls for a $1.8 billion kicker in 2026, which is $800 million above the prior forecast in August, as reported by The Oregonian. This is due to new tweaks to revenue forecasting as well as a better-performing economy.
The election of Donald Trump as president in November is expected to have major implications on the U.S. economy. His objectives include tariffs on foreign goods and mass deportation of illegal immigrants. These would significantly impact the U.S., and global economies, but it’s too early to say how.
“We have to forecast the world as it stands now, not looking around three corners,” Riccadonna says.
The president-elect’s campaign pronouncements varied greatly. There’s also the matter of what a divided Congress can actually pass into law. Tariffs on Asian imports could have a greater impact on West Coast states, which deal more with Asian international corporations. Tariffs affecting the auto industry would have less impact here than states like Michigan, but tariffs on the semiconductor industry would matter a great deal. With agriculture an important pillar of Oregon’s economy, mass deportation could have significant consequences.
Whatever happens, Riccadonna says he hopes to continue the tradition of good external communication established by his predecessors McMullin and Lehner.
“I think it’s a big failure of the economics profession when we communicate only to other economists,” he says. “It’s going to be an ongoing objective of this office to be very transparent with the public and the press, and with the legislature and the governor.”
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