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November 3, 2016

Economic Outlook for the U.S. and DC Metro Area

Terry L, Clower, Ph.D., Director Center for Regional Analysis

Schar School of Policy and Government George Mason University

Presentation to

RSM Clients, Alumni & Friends Event

U.S. Gross Domestic Product Quarterly Change: 2007 – 2017

Source: Bureau of Economic Analysis, IHS Economics August 2016

-10

-8

-6

-4

-2

0

2

4

6Forecast

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

%

Recession Recovery Patterns of GDP Past Four Recessions

0

5

10

15

20

25

30

35

40

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

1982-Q3

1991-Q1

2001-Q4**

2009-Q2

% C

ha

ng

e in

GD

P*

Quarters After Trough *in 1992 or 2009 Chained Dollars ** Quarters 26+ include the 2009 Recession

Sources: Bureau of Economic Analysis, GMU Center for Regional Analysis

* Quarters 26+ include the 2009 Recession Source: Bureau of Economic Analysis

6.2%

8.3%

9.3%

12.2%

8.9%

11.5%

11.06%

12.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 242526 27 28

Pe

rce

nt

of G

DP

Quarters After Start of Recession

1982-Q3

1991-Q1

2001-Q4*

2009-Q2

Increasing Role of Exports % of GDP 28 Quarters Post-Recession

3.4%

4.3% 3.5%

4.2%

5.2%

3.0% 2.7%

3.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 242526 27 28

Pe

rce

nt

of G

DP

Quarters After Start of Recession

1982-Q3

1991-Q1

2001-Q4

2009-Q2

Decreasing Role of Residential Investment % of GDP 28 Quarters Post-Recession

* Quarters 26+ include the 2009 Recession Source: Bureau of Economic Analysis

U.S. Leading Index Month-Over-Year Percent Change

-25

-20

-15

-10

-5

0

5

10

15

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: The Conference Board, GMU Center for Regional Analysis

30

35

40

45

50

55

60

65

Mfg

N-Mfg

ISM Manufacturing and Non-Manufacturing Indices

Source: Institute for Supply Management

200

250

300

350

400

450

500

550

600

650

700

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

Existing (Left Axis)

New (Right Axis)

U.S. New and Existing Home Sales

(000s) (000s)

Source: National Association of Home Builders (New), National Association of Realtors (Existing)

Growth in Total Consumption Outlays

3.1

3.8 3.5

3

2.2

-0.3

-1.6

1.9 2.3

1.5 1.5

2.9 3.2

2.7 2.6 2.3

2.6 2.5

-2

-1

0

1

2

3

4

5

6

Source: Bureau of Economic Analysis, IHS Economics August 2016

Forecast > > > >

-8000

-6000

-4000

-2000

0

2000

4000

Annual Change in Payroll Jobs – US Month-Over-Year (000s)

Sep = +2.4M

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

200

250

300

350

400

450

500

550

600

650

700

Initial Claims for Unemployment 4-Week Moving Average

Oct 22: 258K

Source: Department of Labor

(000s)

4

5

6

7

8

9

10

11

U.S. Unemployment Rate

Source: Bureau of Labor Statistics (Seasonally Adjusted), IHS Economics August 2016

Sep = 5.0

%

IHS Forecast 16 – 4.9 17 – 4.7 18 – 4.8 19 – 4.9 20 – 5.0

0

20

40

60

80

100

120

140

Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16

Consumer Confidence

Source: The Conference Board, GMU Center for Regional Analysis

Expectations

Current Situation

1985 = 100

Expectations = 83.9 Current = 120.6

The Washington Economy

2010 Structure of the Greater Washington Economy

Local Serving Activities 34.8%

Non-Local Business 12.0 %

Total Federal 39.8%

Procurement 19.1%

Other Federal 10.7 %

Fed Wages & Salaries 10.0%

Source: GMU Center for Regional Analysis

0

10

20

30

40

50

60

70

80

90

Federal Procurement in the Washington Metro Area, 1980-2015

$ Billions

TOTAL = $1,235.9 Billion

Source: US Census, Consolidated Federal Funds Report and USAspending.gov

79.9 76.3

69.1 71.1

82.5

Annual Job Change Washington MSA, 2002-2016

-60

-40

-20

0

20

40

60

80

100

20

02

20

05

20

08

(000s) Annual Data Annual Month over Year

2011 2012 2013 2014 2015 2016

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Professional & Business Services Washington MSA

-20

-15

-10

-5

0

5

10

15

20

25

30

20

02

2005

2008

Feb

May

Aug

No

v

Feb

May

Aug

No

v

Feb

May

Aug

No

v

Feb

May

Aug

No

v

Fe

b

May

Aug

No

v

Feb

May

Aug

No

v

Feb

May

Aug

(000s)

Annual Data Annual Month over Year 2010 2011 2012 2013 2014 2015 2016

Sep-16 Total: 746.1

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Professional & Business Services Washington MSA Annual Month Over the Year

-20

-15

-10

-5

0

5

10

15

20

25

30Prof., Sci. & Tech. Svcs & Mgt. Admin. & Waste Mgt.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

(000s)

Federal Government Washington MSA

-20

-15

-10

-5

0

5

10

15

20

25

30

2002

2005

2008

Feb

May

Aug

No

v

Feb

May

Aug

No

v

Feb

May

Aug

No

v

Feb

May

Aug

No

v

Fe

b

May

Aug

No

v

Feb

May

Aug

No

v

Fe

b

May

Aug

(000s)

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Sep-16 Total: 369.8

Annual Data Annual Month over Year 2010 2011 2012 2013 2014 2015 2016

Job Change by Sector Sep 2015 – Sep 2016 Washington MSA

1

3

1

0

0

3

5

10

6

4

14

5

26

(20.0) (10.0) - 10.0 20.0 30.0

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

State & Local Govt

Educ & Health Svcs

Federal Govt.

Prof. & Bus. Svcs

(000s) Total = 76,100

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

5

2

1

0

10

24

34

97

43

65

83

-5

-7

-10

-12

-10

-8

-49

-34

-23

0

-24

-100 -75 -50 -25 0

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

Educ & Health Svcs

Prof. & Bus. Svcs

WMSA Payroll Job Change: Private Sector The Great Recession and Recovery

(000s)

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Total -181 Total 363

Aug 2008-Feb 2010 Feb 2010-Jul 2016

15 Largest Job Markets Job Change: Sep 2015 – Sep 2016

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%Washington +2.4%

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

0

2

4

6

8

10

12

August 6.5 – DC 4.9 – U.S. 4.0 – SMD 4.0 – MSA 3.3 – NVA

Unemployment Rates in the WMSA By Sub-State Area, 2009-2016

Source: Bureau of Labor Statistics (Region - Not Seasonally Adjusted, US – Seasonally Adjusted)

47,989 47,150 46,096

36,871 43,070 47,495

4,495

(24,741) (27,907) (40,000)

(20,000)

-

20,000

40,000

60,000

80,000

100,000

2012-2013 2013-2014 2014-2015

Net Domestic Migration

Net International Migration

Natural Increase

Source: Census Bureau

WDC Metro Area Population Components of Change

(60.0)

(40.0)

(20.0)

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

Aug = -9.5%

Percent Change in Inventories of Existing Homes

Month-Over-Year 2000 – 2016, MSA

Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis. Total monthly inventory includes listings active at the end of the month plus sales during the month.

Total Active Listings Per Sale Aug Each Year – Metro Area

0

2

4

6

8

10

Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

199

9

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Existing Home Sales Washington MSA Through Aug 2016

12-Month Moving Average

Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis

100

150

200

250

300

350

400

450

500

Median House Sales Price Washington MSA

$399.3K Aug 2016

Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis

(000s) (000s)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Washington MSA Building Permits

2003 – 2016, 3-Month Moving Avg

Source: Census Bureau, GMU Center for Regional Analysis

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

Washington MSA Leading Economic Index Month-Over-Year Percent Change

12-Month Moving Average

Source: GMU Center for Regional Analysis

-4

-2

0

2

4

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

%

Source: IHS Economics, GMU Center for Regional Analysis, Forecast: April 2016

U.S. GDP and Washington Area GRP 2007 – 2015 – 2020

(Annual % Change)

Washington

U.S.

%

-2

-1

0

1

2

3

4

5

6

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

%

Source: GMU Center for Regional Analysis, Forecast: April 2016

Economic Outlook (GRP), 2007-2020 Washington Area and Sub-State Areas

(Annual % Change)

DC

SM

MSA

NV

%

Employment Change in the WMSA by Sub-State Area (000s)

2013 2014 2015 2016 2017 2018 2019 2020

D.C. 13.0 6.5 14.7 14.1 9.7 10.6 8.9 8.2

Sub. MD 6.1 11.1 17.4 20.2 17.7 14.1 12.0 11.0

No. VA 8.9 1.3 27.3 25.5 23.6 15.9 13.7 12.6

REGION 28.0 18.9 59.4 59.8 51.0 40.6 34.6 31.8

Average Annual Change 1990-2010 = 36,000 Source: BLS, IHS Economics, GMU Center for Regional Analysis (January 2016) NOTE: The regional totals do not include Jefferson, WV.

Where are we?

• We are growing: • Some diversification

• Some catch-up

• Recent job growth across all wage levels

• Headwinds • Sequester?

• Further market shifts needed

• Cost of living

• Cost of doing business

• Mobility

• Access to capital

• Lack of regional branding, economic development cooperation

• Globally competitive?

• Advantages • Government Center • International Institutions • Connectivity to the World • Concentration of Leaders • High Quality-of-Life • Diverse Population • Higher Educational Services • Educated Work Force • High Labor Force Participation • Advanced Occupational

Specializations

Thank You

Questions

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