• One year after posting the biggest decline in CNBC's competitiveness rankings, Oregon bounces back in a big way, rising 17 spots to No. 18 overall.
• The Beaver State's economy surged back following sharp declines at the start of the Covid pandemic.
• A state economist warns that gains may be temporary as growth slows down.

What a difference a year makes. Oregon climbed 17 spots to finish at No. 18 in the CNBC America's Top States for Business rankings for 2022, the biggest improvement of any state.

Last year at this time, Oregon's economy had contracted by 2.8% after the Covid pandemic dealt a body blow with its financial health heavily reliant on international trade and tourism. No state fell further in last year's rankings as it struggled to rebound.

It did rebound, and then some. The state's economy snapped back to grow 5.8% in 2021 as trade and tourism return. Also rebounding in a big way: the state's revenue. Payments during tax season this year jumped 70% from an already strong 2021, according to the Oregon Office of Economic Analysis, which now expects the state will have $427 million more in its coffers than it had forecast as recently as March. 

Economic gains are big, but vulnerable

In the Economy category of the CNBC study, Oregon improves to No. 15 from No. 29 last year.

But state economists warn this growth is likely fleeting.

"Some of these really strong gains are clearly temporary and will either fall or more likely crash back to earth in the quarters and years ahead," wrote state economist Josh Lehner in a blog post in late June. "This is not a permanent shift to higher taxes but rather reflects pandemic factors and/or taxpayer behavior." 

Lehner cautioned that much of the gain in tax revenue came from nonwage activity such as realizing capital gains. That, he warned, is not sustainable.

"With recessionary risks rising, profits and gains could soon turn into losses," he wrote.

In their official forecast, state economists expect Oregon will persevere through the challenges, thanks in part to all the unexpected money in the bank. The forecast calls for solid job growth — 3.8% this year, and 2.3% in 2023 — along with more revenue expansion.

The biggest risk, they write, is inflation persisting longer than expected, leading to a sharper response from Federal Reserve policymakers as they seek to rein in prices.

"A more severe recession would likely be needed to wring out more entrenched inflationary pressures, whereas a milder recession may be needed if most of today's inflation is transitory, or temporary," the forecast notes.

Skilled worker help

Also helping Oregon in 2022: the competitive landscape is shifting to its strengths.

Historic worker shortages have elevated the importance of the Workforce category in CNBC's study, because the methodology assigns greater weight to the competitive factors that states are pushing the most.

Oregon typically does well in the category, and it improves to No. 9 in 2022. The state boasts the eighth-highest concentration of science, technology, engineering and math (STEM) employees, according to the U.S. Bureau of Labor Statistics. Net migration of college-educated workers to the state is also among the highest in the country, according to Census data.

Last year, the CNBC study put a greater emphasis on business costs as the economy continued struggling to its feet following the worst of the pandemic. That hurt Oregon's overall ranking in 2021, and those costs remain high in 2022. But the category's lower weight means those costs have slightly less impact on Oregon's standing this year.

Still, for 2022, Oregon ranks No. 34 in the Cost of Doing Business category, down from No. 33 last year. In particular, rents for office and industrial space in the state are high, according to data compiled for CNBC by CoStar Group.

Oregon's Workforce advantage might not last if the trends persist. Worker shortages are worsening in the state as the economy improves. And the state economists caution that migration to Oregon has begun to slow.

"To the extent migration flows do not rebound as expected, Oregon's economic and revenue forecast will underperform and need to be revised lower," the state economists' forecast says.

And that could put Oregon back in the spotlight in next year's rankings — potentially for less positive reasons.

Where does your state rank? Check out the full list, and let us know what you think by posting on social media with the hashtag #TopStates.