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DBIA-MAR Luncheon February 19, 2013 The U.S. and Washington Area Economies’ Current Economic Performance and Near-Term Outlook Stephen S. Fuller, Ph.D.

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Presentation on theme: "DBIA-MAR Luncheon February 19, 2013 The U.S. and Washington Area Economies’ Current Economic Performance and Near-Term Outlook Stephen S. Fuller, Ph.D."— Presentation transcript:

1 DBIA-MAR Luncheon February 19, 2013 The U.S. and Washington Area Economies’ Current Economic Performance and Near-Term Outlook Stephen S. Fuller, Ph.D. Dwight Schar Faculty Chair and University Professor Director, Center for Regional Analysis George Mason University

2 Quarters After Trough % Change in GDP Recession Recovery Patterns of GDP Past Four Recessions Sources: Bureau of Economic Analysis, GMU Center for Regional Analysis

3 Components of Post Recession Recoveries Average Growth After 14 Quarters Source: Bureau of Economic Analysis Avg % Chg

4 Decreasing Role of Residential Investment % of GDP 14 Quarters Post-Recession Source: Bureau of Economic Analysis

5 The Contribution of Housing to Gross Domestic Product (GDP) Source: U.S. Bureau of Economic Analysis, NIPA tables, Table 1.5.5 Gross Domestic Product, Expanded Detail Furnishings & household equip 3%

6 ISM Manufacturing and Non-Manufacturing Indices Source: Institute for Supply Management

7 Annual Change in Payroll Jobs – US Month-Over-Year (000s) Dec = + 1.86 M Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

8 U.S. Payroll Job Change by Sector Dec 2011 – Dec 2012 (000s) Total = 1,835 Ranked by Size in 2011 Source: Bureau of Labor Statistics (Seasonally Adjusted), GMU Center for Regional Analysis

9 Source: Department of Labor Initial Claims for Unemployment 2011-Present 4-Week Moving Average Jan 26 352 (000s)

10 Consumer Prices 2001 - 2017 Forecast > > > > > % Source: Bureau of Labor Statistics, IHS Global Insight Jan. 7, 2013

11 Interest Rates 2005 - 2017 Forecast > > > > > % Source: IHS Global Insight Jan. 7, 2013

12 Existing (Left Axis) New (Right Axis) U.S. New and Existing Home Sales (000s) Source: National Association of Home Builders (New), National Association of Realtors (Existing)

13 Housing Forecast (millions of Units) Year Housing StartsExisting House Sales 2005 2.0737.076 2011 0.6124.283 2012 0.7744.695 2013 0.9705.062 2014 1.2815.606 2015 1.612 5.990 2016 1.6695.899 2017 1.6665.728 Source: IHS Global Insight “US Executive Summary” January 7, 2013

14 U.S. Gross Domestic Product Quarterly Change: 2007 – 2014 % Forecast > > > > > Source: Bureau of Economic Analysis, Global Insight Jan 7 2013

15 % U.S. Economic Performance Source: Bureau of Economic Analysis, Global Insight Jan. 7 2013

16 How did the recession change the Washington Area economy?

17 US GDP and Washington GRP % Washington GRP US GDP

18 Wash MSA Payroll Job Change: Private Sector The Great Recession and Recovery To December 2012 (000s) Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Total -193Total 132

19 Washington Area Job Changes By Sector, 2008-2012 (through Dec) (in thousands) SECTORWashington Metro Area D.C.Suburban MD Northern Virginia Professional, Business Services 39.21.06.631.6 Government 59.312.419.227.7 Health, Educ. Svcs. 60.823.813.723.3 Other Services 7.27.4-0.70.5 Hospitality 26.18.16.111.9 All Other -64.8-4.5-36.6-23.7 TOTAL 127.848.28.371.3 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

20 How is the Washington Area’s economy currently performing?

21 Annual Job Change Washington MSA, 2002-2012 (000s) Annual Data Annual Month over Year 2009 2010 2011 2012 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

22 16 Large Job Markets Job Change: Dec 2011 – Dec 2012 (000s) Washington + 30,200 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

23 Job Change by Sector Dec 2011 – Dec 2012 Washington MSA (000s) Total = 30,200 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

24 Job Change by Sector Nov 2012 – Dec 2012 Washington MSA (000s) Total = -1,300 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

25 Annual Job Change District of Columbia, 2002-2012 (000s) Annual Data Annual Month over Year 2009 2010 2011 2012 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

26 Job Change by Sector Dec 2011 – Dec 2012 District of Columbia (000s) Total 1,400 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

27 Annual Job Change Suburban Maryland, 2002-2012 (000s) Annual Data Annual Month over Year 2009 2010 2011 2012 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

28 Job Change by Sector Dec 2011 – Dec 2012 Suburban Maryland (000s) Total 12,600 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

29 Annual Job Change Northern Virginia, 2002-2012 (000s) Annual Data Annual Month over Year 2009 2010 2011 2012 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

30 Job Change by Sector Dec 2011 – Dec 2012 Northern Virginia (000s) Total 20,600 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

31 8.6 – DC 7.8 – U.S. 5.7 – SMD 5.2 – MSA 4.1 - NVA Unemployment Rates in the WMSA By Sub-State Area, 2005-2012 Source: US Bureau of Labor Statistics (Region - Not Seasonally Adjusted, US – Seasonally Adjusted)

32 Key Conditions Shaping the Future Washington Area Economy: Declining Federal Spending Wage and Salary Compression Population Change

33 Federal Procurement in the Washington Metro Area, 1980-2012 $ Billions | | TOTAL = $1,023.5 Billion Source: US Census, Consolidated Federal Funds Report 2011 $80.0 B $75.6 B 2012

34 Federal Government Washington MSA (000s) Annual Data Annual Month over Year 2008 2009 2010 2011 2012 Source: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

35 Summary for Federal Spending Trends in the Washington Metropolitan Area, 2010-2012 Federal Procurement Outlays declined 8.4% between FY 2010 and FY 2012. Federal employment has declined since peaking in July 2010, losing 8,700 jobs or 2.25%. Federal payroll declined by 0.6% between FY 2010 and FY 2011 and will continue to decline as the workforce shrinks and older workers retire and are replaced by younger workers.

36 Changing Job and Income Patterns In the Washington Metropolitan Area Source: US Bureau of Labor Statistics, GMU Center for Regional Analysis $ 2011 Avg. Annual Pay $92.2K $50.7K

37 Early Signs of Income Compression Washington MSA Source: US Bureau of Economic Analysis, GMU Center for Regional Analysis (in thousands)(in thousands, 2011 dollars) Jobs Earnings Per Employee

38 The Washington Metropolitan Area Population Is Aging (percent share, total population in millions) Age Group 2012 2017 2029 Change Less than 25 years 32.7% 32.0% 31.5% 17.2% 25 to 44 years old 30.2 30.0 29.5 19.5% 45 to 64 years old 26.6 25.3 23.3 6.8% 65 years old + 10.5%12.7% 15.7% 82.4% Totals 5.8106.213 7.087 22.0% Source: IHS Global Insight, GMU Center for Regional Analysis

39 2012-2017 Forecast for the Washington Metropolitan Area

40 Indicator20122017Change GRP Growth$450.9$571.826.8% Net Job Growth3,915.34,271.5 356.2 9.1% Replacement Job Growth 459.111.7% Household Growth 2,135.382,285.27 149.89 7.0% GRP, Job and Workforce Growth in the Washington Metropolitan Area, 2012 – 2017 (in billions of current $s, jobs in thousands)

41 Job Growth in the Washington Area By Sector, 2012-2017 (in thousands) Sector 2012 2017 Change Percent Prof. & Bus. Ser. 697.4 841.2 143.8 20.6 Federal Gov’t 380.4 358.4 - 22.0 - 5.8 Education/Health 380.2 419.0 38.8 10.2 S & L Gov’t 309.7321.6 11.9 3.8 Hospitality 276.8 285.0 8.2 3.0 Retail Trade 254.1 266.6 12.5 4.9 Other Services 182.8 185.3 2.5 1.4 Financial Services 150.0154.7 4.7 3.1 Construction 146.4 201.8 55.4 37.8 Information Ser. 80.6 87.6 7.0 8.7 Other Sectors (3) 175.0 193.2 18.2 10.4 Total Jobs 3,033.4 3,314.4 281.0 9.3

42 Major Sources of Job Growth in the Washington Area, 2012-2017 (in thousands) Growth Sectors 2012 2017 Change Percent Prof. & Bus. Ser. 697.4 841.2 143.8 20.6 Education/Health 380.2 419.0 38.8 10.2 Construction 146.4 201.8 55.4 37.8 Sub-Totals1,224.0 1,462.0 238.0 19.4 % Total 40.4 44.1 84.7_________ Totals3,033.4 3,314.4 281.0 9.3 Sources: IHS Global Insight; GMU Center for Regional Analysis

43 GRP Per Job in the Washington Area By Sector (in 2005 dollars) Sector 2012 2017 % Change Prof. & Bus. Services$134,750$154,656 14.8% Federal Gov’t 138,361 138,566 0.1 Education/Health 59,730 57,508 - 3.7 S & L Gov’t 60,975 56,920 - 6.6 Hospitality 42,883 42,391 - 1.1 Retail Trade 60,807 64,136 5.5 Other Services 70,339 69,151 - 1.7 Financial Services 543,482 578,062 6.4 Construction 98,824 82,490 - 16.5 Information Services 349,868 468,376 33.9 Other Sectors 147,903 151,120 2.2 GRP per Job$130,653$138,881 6.3

44 GRP Per Job in the Washington Area By Sector (in 2005 dollars) High Job Growth 2012 2017 % Change Prof. & Bus. Svs. (20.6%) $134,750$154,656 14.8 Education/Health (10.2%) 59,730 57,508 - 3.7 Construction (37.8%) 98,824 82,490 - 16.5 Other High Value-Added Sectors Information Services (8.7%) 349,868 468,376 33.9 Financial Services (3.1%) 543,482 578,062 6.4 Federal (-5.8%) 138,361 138,566 0.1 Wholesale Trade (8.9%) 183,006 191,884 4.8 Transport/Warehsg (16.1%) 138,768 135,938 - 2.0 GRP per Job$130,653$138,881 6.3

45 2017 Structure of the Greater Washington Economy Local Serving Activities 38.0% Non-Local Business 16.3 % Total Federal 28.8% Procurement 12.2% Assn 1.9 % Hosp. 2.6% Int’l 3.9% Other 1.5% Other Federal 8.9 % Health/Ed. 7.0 % Fed Wages & Salaries 7.7 % Source: GMU Center for Regional Analysis

46 The Changing Structure of the Washington Area Economy, 2010-2040 Source: IHS Global Insight, GMU Center for Regional Analysis (percent distribution)

47 Thank You Questions cra.gmu.edu

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