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DBIA-MAR Luncheon

An analysis of the current economic performance and near-term outlook of the U.S. and Washington Area economies, including GDP growth, housing market trends, job change by sector, and unemployment rates.

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DBIA-MAR Luncheon

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  1. DBIA-MAR Luncheon 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 February 19, 2013

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

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

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

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

  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 SectorDec 2011 – Dec 2012 Total = 1,835 Ranked by Size in 2011 (000s) Source: Bureau of Labor Statistics (Seasonally Adjusted), GMU Center for Regional Analysis

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

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

  13. Housing Forecast (millions of Units) YearHousing StartsExisting House Sales 2005 2.073 7.076 2011 0.612 4.283 2012 0.774 4.695 2013 0.970 5.062 2014 1.281 5.606 20151.6125.990 2016 1.669 5.899 2017 1.666 5.728 Source: IHS Global Insight “US Executive Summary” January 7, 2013

  14. U.S. Gross Domestic ProductQuarterly 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) Total -193 Total 132 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

  19. Washington Area Job Changes By Sector, 2008-2012 (through Dec)(in thousands) 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 ChangeWashington MSA, 2002-2012 Annual Data Annual Month over Year 2009 2010 2011 2012 (000s) Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

  22. 16 Large Job MarketsJob 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 SectorDec 2011 – Dec 2012Washington MSA Total = 30,200 (000s) Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

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

  25. Annual Job ChangeDistrict 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 SectorDec 2011 – Dec 2012 District of Columbia Total 1,400 (000s) Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

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

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

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

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

  31. Unemployment Rates in the WMSA By Sub-State Area, 2005-2012 8.6 – DC 7.8 – U.S. 5.7 – SMD 5.2 – MSA 4.1 - NVA 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 $80.0 B $75.6 B TOTAL = $1,023.5 Billion | < 80-90 = $96.5 B > | < 91-00 = $207.9 B >| < 01–10 = $563.5 B > | 2012 2011 Source: US Census, Consolidated Federal Funds Report

  34. Federal GovernmentWashington 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 $92.2K $ $ $ $ $ $$ $$ $$ $$ $$ $ $ $50.7K 2011 Avg. Annual Pay Source: US Bureau of Labor Statistics, GMU Center for Regional Analysis

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

  38. The Washington Metropolitan Area Population Is Aging (percent share, total population in millions) Age Group201220172029Change 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 5.810 6.213 7.087 22.0% Source: IHS Global Insight, GMU Center for Regional Analysis

  39. 2012-2017 Forecast for the Washington Metropolitan Area

  40. 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) Sector20122017ChangePercent 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 309.7 321.6 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 2.51.4 Financial Services 150.0 154.7 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 Sectors20122017ChangePercent 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-Totals 1,224.0 1,462.0 238.0 19.4 % Total 40.4 44.1 84.7_________ Totals 3,033.4 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) Sector20122017% 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 Growth20122017% 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 Non-Local Business 16.3 % Other Federal 8.9 % Fed Wages & Salaries 7.7 % Total Federal 28.8% Procurement 12.2% Local Serving Activities 38.0% Int’l 3.9% Hosp. 2.6% Assn 1.9 % Health/Ed. 7.0 % Other 1.5% Source: GMU Center for Regional Analysis

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

  47. Thank You Questions cra.gmu.edu

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