Old Dominion University 2017 Regional Economic Forecast€¦ · Sequestration ATRA2012 BBA 2013 BBA 2015 forecast 11 Caps on Department of Defense Discretionary Spending, FY 2012

1

Old Dominion University2017 Regional Economic Forecast

January 25, 2017

Professor Vinod AgarwalDirector, Economic Forecasting Project

Strome College of Businesswww.odu.edu/forecasting

The views expressed in this presentation do not represent official positions on the part of Old Dominion University, the Old Dominion University Board of Visitors, or any of the sponsors of the Economic Forecasting Project. The data in this presentation may be subject to revision. To our knowledge, all data in this presentation are accurate at the time of the presentation.

2

Presentation outline

I. 2016 Economic Performance

a) Regional and National Economies

b) Defense

c) Civilian Nonfarm Jobs

d) Residential Market in Hampton Roads

e) Taxable Sales and Hotel Revenue

f) Port and Cargo

II. Forecast for 2017

3

Selected Time Periods from 2001 to 2017*

13.69%

10.84%

2.60% 1.59% 2.18%

21.21%

0.87%

3.71%1.36% 1.41%

0%

5%

10%

15%

20%

25%

2001 to 2009 2009 to 2014 2014 to 2015 2015 to 2016e 2016 to 2017f

USA Hampton Roads

Source: Bureau of Economic Analysis and the Old Dominion University Economic Forecasting Project. Data on GDP incorporates latest BEA

revisions in September 2016. * numbers for 2016 are estimates.

Rate of Growth of Real Gross Domestic Product (U.S.) and Gross Regional Product (Hampton Roads)

Growth rate in 2015Virginia: 1.44%

DC Metro: 1.27%

The 2007-2009 Recession and its Recovery through December 2016% Change in Total Non-farm Payroll Employment from Pre-Recession Peak

4.96%

4.30%

-1.79%

-8%

-6%

-4%

-2%

0%

2%

4%

6%0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110

Ch

an

ge

from

Pre

-Rec

essi

on

Peak

Months After Pre-Recession Peak

USA VA HR

Pre-Recession Peak Dates:U.S.: January, 2008Virginia: April, 2008

Hampton Roads: July, 2007

Unemployment Rates in U.S., Virginia, and Hampton Roads

0

2

4

6

8

10

12

1/1

/2000

9/1

/2000

5/1

/2001

1/1

/2002

9/1

/2002

5/1

/2003

1/1

/2004

9/1

/2004

5/1

/2005

1/1

/2006

9/1

/2006

5/1

/2007

1/1

/2008

9/1

/2008

5/1

/2009

1/1

/2010

9/1

/2010

5/1

/2011

1/1

/2012

9/1

/2012

5/1

/2013

1/1

/2014

9/1

/2014

5/1

/2015

1/1

/2016

9/1

/2016

Recession US Virginia Hampton Roads

Source: Bureau of Labor Statistics

Per

centa

ge

6

Defense Spending

450

500

550

600

650

700

FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Bil

lion

s of

doll

ars

BCA 2011 Sequestration ATRA2012 BBA 2013 BBA 2015

7

Caps on Department of Defense Discretionary Spending, FY 2012 to FY 2021

Source: BCA2011,Budget Requests for FY14, CBO Sequestration Update Report and the Old Dominion University Economic Forecasting Project.

The legislated cap on spending increased by $27B (5.18%) during FY 2016 and by

only $3B or 0.55% during FY 2017; is expected be $2B less in FY 2018.

What can we expect from President Trump’s Administration?

Three among many possibilities…

8

450

500

550

600

650

700


Billio

ns o

f d

ollars

Sequestration ATRA2012 BBA 2013 BBA 2015 forecast

9



Good times are here again!! 350 Ships; Full Rate F-35; Growing the Army

and Marine Corps. National Defense Expenditures rise by 5% annually

450

500

550

600

650

700


Billio

ns o

f d

ollars


10



Remember the Good Times? Tax Reform, Infrastructure Crowd out

Defense Spending after first year. Possibility of BRAC.

450

500

550

600

650

700


Bil

lio

ns

of

do

lla

rs


11



Status Quo becomes the new Normal. Tax Reform, Infrastructure and

Defense all compete for attention. Congress continues to modify BCA caps.

12Source: U.S. Department of Defense , U.S. Department of Commerce, and the Old Dominion University Economic Forecasting Project

36.7%

39.2%

45.1%

48.8%49.5%

33.5%

0%

10%

20%

30%

40%

50%

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

e

2017

f

Hampton Roads Gross Regional Product Attributable to DOD Spending

1984-2017

Estimated Direct DOD Spending in Hampton Roads

Source: U.S. Department of Defense and the Old Dominion University Economic Forecasting Project. *Includes Federal Civilian and Military Personnel and Procurement

Bill

ion

s o

f $

13

10.0

19.5 19.618.7

19.2 19.1 19.4

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

Between 2000 and 2012, DOD spending in our region increased by an annual average of 5.8% . In 2017, it will be about 1% lower than its peak in 2012.

2000 to 2017

14

Estimated Average Compensation (Wages, Salaries and Fringe Benefits):Selected Categories

Hampton Roads: 2014 and 2015

Source: U.S. Bureau of Economic Analysis (BEA) and the Old Dominion University Economic Forecasting Project. * BEA calls compensation as earnings. Data updated on November 17, 2016

Earnings in 2014

Earnings in 2015

Percent change

2014 to 2015

Military $91,531 $91,283 -0.27%

Federal Civilian Govt. Employees

$103,583 $107,521 3.80%

State and Local Govt. Employees

$59,150 $60,088 3.28%

Private Nonfarm $41,279 $42,185 2.19%

15

Growth (CAGR) in Estimated Average Compensation (Wages, Salaries and Fringe Benefits) Selected Categories

Hampton Roads: 2001 to 2015

Source: U.S. Bureau of Economic Analysis (BEA) and the Old Dominion University Economic Forecasting Project. BEA refers to compensation as earnings.

Compound Annual Growth Rate

2001 to 2010

Compound Annual Growth Rate

2010 to 2015

Military 7.2% 0.7%

Federal Civilian Govt. Employees 4.5% 2.6%

State and Local Govt. Employees 3.6% 2.1%

Private Nonfarm 2.9% 2.0%

16

Old Dominion University 2016 Hampton Roads Scorecard

Source: Old Dominion University Economic Forecasting Project. Figures for calendar year 2016 include predicted values for December 2016. **Employment data for 2015 and 2016 will be revised by U.S. BLS in March /April 2017.

Actual Change

2016*

Predicted

Change 2016

Civilian

Employment**0.47% +0.94%

Unemployment

Rate**4.59% 4.30%

Annual Civilian Employment (Jobs) in Hampton Roads: 1999 to 2016

706.6

730.5737.5

749.9

775.5767.2

742.2 740.2746.8

765.4769.0

650

675

700

725

750

775

800

Source: U.S. Department of Labor CES data and the Old Dominion University Economic Forecasting Project. Not seasonally adjusted.

The HR economy added only 3,600 jobs in 2016. At the end of 2016, we will still be about 6,500 jobs below our pre- recession level.

In t

hou

san

ds

18

Net New Civilian Jobs Gained/Lost in Selected MSA’s, Virginia, and North Carolina

From 2007* to 2016

-6.5

108.5

19.541.3

76.748.7

105.1

152.5185.7

-50

0

50

100

150

200

Th

ou

san

ds

Source: U.S. Department of Labor CES seasonally unadjusted data and the Old Dominion University Economic Forecasting Project. * Peak employment in Raleigh, Durham, Northern Virginia, and Virginia occurred in 2008. Change for these areas is shown for 2008 through 2016. Data will be revised in March 2017

Rethink and Invest in Our Strengths

• REGION --not just individual cities and counties– Go Virginia has potential

• Traffic Problems– Not just roads, but also airports

• Diversification – HR Community Foundation Economic Competitiveness Initiative suggested:

– Advanced manufacturing --- Bio Sciences– Coastal Energy --- Cyber Security– Modelling and Simulation--- Unmanned Systems

• Entrepreneurship

Performance of Residential Housing Market During 2016

20

21

Value of Building Permits for One Unit Family Homes in Hampton Roads: 1991-2015

Source: U.S. Bureau of the Census and the Old Dominion University Economic Forecasting Project

Value of permits increased by 5.4% in 2016; Our forecast was an increase of 3.4%. It is 37% below its peak in 2005

$1,338

$846

0

200

400

600

800

1000

1200

1400

1600

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

20

01

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

20

13

20

14

201

5

201

6e

Mil

lions

of

$

22

Number of Existing and New Construction Homes Sold

Hampton Roads: 2002-2016

Year Existing Homes SoldNew Construction

Homes Sold

Percent New

Construction

2002 19,869 4,969 20.0%

2003 21,421 4,757 18.2%

2004 23,548 4,587 16.3%

2005 24,755 4,379 15.0%

2006 22,405 4,327 16.2%

2007 19,154 3,912 17.0%

2008 15,046 3,178 17.4%

2009 15,851 2,673 14.4%

2010 14,703 2,265 13.4%

2011 15,818 2,366 13.0%

2012 16,856 2,664 13.6%

2013 18,791 2,878 13.3%

2014 18,700 2,485 11.7%

2015 20,595 2,954 12.5%

2016 22,456 3,219 12.5%

Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information Deemed Reliable But not

Guaranteed. Figures reported here represent only those properties that are listed through REIN by REIN members and may not represent all new

construction activity in our region.

41% decline

in sale of existing homes

from 2005 to 2010existing

homes Sales Have increased by 7,753

from 2010 to 2016

23

Median Sale Price of Existing Residential Homes


Year Median Price Percent change year to year

2002 $116,900 7.3%

2003 $130,000 11.2%

2004 $156,500 20.4%

2005 $192,000 22.7%

2006 $214,900 11.9%

2007 $223,000 3.8%

2008 $219,000 -1.8%

2009 $207,000 -5.5%

2010 $203,900 -1.5%

2011 $180,000 -11.7%

2012 $185,000 +2.78%

2013 $190,000 +2.70%

2014 $193,205 +1.70%

2015 $203,000 +5.07%

2016 $210,000 +3.5%

90% increase from 2002-07

19% decreaseFrom 2007-11

Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information deemed reliable but not guaranteed.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2010 2015 2016

24

Estimated Inventory of Existing Residential Homes as Measured by Active Listings

Hampton Roads: 2007, 2010, 2015, and 2016

Source: Real Estate Information Network Inc. and the Old Dominion University Economic Forecasting Project. Information deemed reliable but not guaranteed.

Average ( Jan. 1996 through December 2016) = 8,037

4.33

0

2

4

6

8

10

12

Estimated Months of Supply of All Existing Homes in Hampton Roads

Based on Average Sales in the Last 12 Months: January 1996 – December 2016

25Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information deemed reliable but not guaranteed.

Average (Jan 1996- December 2016) = 5.66 months

December 2016: 4.33Peak: 10.24 (November 2010)

Existing Residential Homes Sold and Average Days on the Market


26Source: Real Estate Information Network Inc. and the Old Dominion University Economic Forecasting Project. Information deemed reliable but not guaranteed. Days on Market is calculated from the date listed to the date under contract date for existing homes sold.

17,058

18,924

24,755

19,154

15,046

14,703

18,79120,595

22,456

6761

27 28

65

83

102

8884

75

0

20

40

60

80

100

120

0

5,000

10,000

15,000

20,000

25,000

30,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Homes Sold Average Days on Market

27

Summary on Existing Homes Market since 2011

• Inventories have decreased substantially.

• Days on market have also decreased.

• Number of homes sold has increased.

• Estimated months of supply have declined substantially.

• But the median price of homes has increased only slightly

• The explanation lies in the size of the distressed market---which consists of short sales and bank-owned homes (REOs).

606

3,224

1,229

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jun

-08

Sep

-08

Dec

-08

Mar

-09

Jun

-09

Sep

-09

Dec

-09

Mar

-10

Jun

-10

Sep

-10

Dec

-10

Mar

-11

Jun

-11

Sep

-11

Dec

-11

Mar

-12

Jun

-12

Sep

-12

Dec

-12

Mar

-13

Jun

-13

Sep

-13

Dec

-13

Mar

-14

Jun

-14

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Number of Active Listings of Distressed Homes (REO & Short Sales)

Hampton Roads: June 2008 to December 2016

28Source: Real Estate Information Network (REIN) and the Old Dominion University Economic Forecasting Project.

December 2016: 1,229Peak: 3,224 (November 2010)

Number of Existing Short Sale and REOs Residential Homes Sold

Hampton Roads: 2006- 2016

29Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information Deemed Reliable But not Guaranteed.

Year All Sales Short SalesPercent

Short SalesREO Sales

Percent

REO Sales

2006 22,405 3 <1% 56 <1%

2007 19,152 40 <1% 223 1.2

2008 15,047 217 1.4 833 5.5

2009 15,849 598 3.8 2,271 14.3

2010 14,696 784 5.3 3,021 20.6

2011 15,817 1,127 7.1 4,213 26.62012 16,856 1,644 9.8 3,337 19.8

2013 18,791 1,769 9.4 3,178 16.9

2014 18,700 1,347 7.2 2,744 14.7

2015 20,592 1,230 6.0 2,542 12.3

2016 22,456 1,002 4.5 2,294 10.2

Housing Affordability

30

30-Year Fixed Mortgage Rate (Weekly, ending Thursday)July 7, 2016 to January 19, 2017

3.473.41

4.32

4.09

http://fred.stlouisfed.org/graph/?g=cr5h

http://fred.stlouisfed.org/graph/?g=cr5h

32

Housing Affordability: Monthly Payment for a Median Price Resale House as a Percent of Median Household Monthly Income

Hampton Roads and the U.S. : 1979 to 2016

38.336.3

28.0

34.4

27.3

21.5

19.0

22.8 22.5

36.0

31.1

20.6

30.6

27.8

22.2

18.4 19.5 19.3

0

5

10

15

20

25

30

35

40

45

1979 1989 1999 2006 2008 2010 2012 2014 2016

Pe

rce

nt

U.S.

Hampton Roads

Source: The Old Dominion University Economic Forecasting Project. Prevailing 30 year average mortgage rate is used for each year. For example rate used for 2015 is 3.85 percent and for 2016 it is 3.65 percent

33

Estimated House Rental and Principal, Interest, and Taxes for a House Payment


YearMedian Monthly Rent for

a Three Bedroom House

PI&T Monthly for a

Median Priced

Existing House

Ratio of Monthly Rent

to PI&T

2002 911 861 1.06

2003 1,037 890 1.16

2004 1,044 1,073 0.97

2005 1,087 1,315 0.83

2006 1,118 1,533 0.73

2007 1,164 1,598 0.73

2008 1,247 1,507 0.83

2009 1,236 1,307 0.95

2010 1,277 1,233 1.04

2011 1,319 1,071 1.23

2012 1,454 1,015 1.43

2013 1,570 1,080 1.45

2014 1,562 1,118 1.40

2015 1,530 1,154 1.33

2016 1,601 1,163 1.38Source: H.U.D. and the Old Dominion University Economic Forecasting Project. It is assumed that real estate tax rate is 1% and the tax reduction received by home owners would compensate for home owners insurance and maintenance expenditures. Prevailing 30 year average mortgage rate is used for each year. For example rate used for 2015 is 3.85 percent and for 2016 it is 3.65 percent

34

Old Dominion University 2016 Hampton Roads Scorecard

Source: Virginia Department of Taxation, Smith Travel Research and the Old Dominion University Economic Forecasting Project.*Figures for calendar year 2016 include predicted values for December 2016.

Actual Change 2016*

Predicted Change 2016

Taxable Sales +1.97% +3.60%

Hotel Revenue

+6.72% +4.20%

35Source: Virginia Department of taxation and the Old Dominion University Economic Forecasting Project. *Figures for calendar year 2016 include predicted values for December 2016.

20.56 20.98 22.21

0

5

10

15

20

25

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6e

$ B

illio

ns

Taxable sales increased by 3.8% during 2015 and an estimated 2.0% during 2016.

Taxable Sales, Hampton Roads: 1996 to 2016

The Performance of the Hotel Industry in Hampton Roads

36

37

4.8%

6.2%6.7%

3.2%

5.8%

8.2%

0%

2%

4%

6%

8%

10%

12%

14%

USA Virginia Hampton Roads

REVENUE

REVPAR

Source: STR Trend Report January 24, 2017 and the Old Dominion University Economic Forecasting Project.

Percent Change in Hotel Revenue and REVPAR 2015 to 2016

38

Hotel Revenue in Hampton Roads 1996-2016


708.3

804.7

0

100

200

300

400

500

600

700

800

900

Mil

lio

ns o

f $

Hotel Revenue grew by 5.9 % during 2015 and by another 6.7 % during 2016.

Available Hotel Rooms and Rooms Occupied in Hampton Roads (000s): 1991-2016

32,015

36,76739,614 36,978

18,237

22,107

22,142

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

Available

Occupied


40

Percent Change in Hotel Revenue within Hampton Roads: 2015 to 2016


0.46%

11.85%

3.83%4.71%

7.34% 6.72%

0%

2%

4%

6%

8%

10%

12%

14%

Performance of the Port of Virginia

41

42

Operating Income/Loss for the Port of Virginia (In Million $)

-$20.7 -$20.1

-$11.1 -$16.9

$13.6

$4.8

-25

-20

-15

-10

-5

0

5

10

15

20

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Fiscal Year 2006 through Fiscal Year 2016 (ending June 30)

Source: Virginia Port Authority Comprehensive Annual Financial Report for Fiscal year 2015 and Fiscal Year 2016, and the Old Dominion University Economic Forecasting Project.

Mil

lion

$

Port of Virginia’s Operating Income from January to October 2016 was $14.6M compared to $9.6M for the same time period in 2015.

43

Twenty-Foot Equivalent Container Units (TEUs) at the Port of Virginia: 1991 to 2016

Source: Virginia Port Authority and Old Dominion University Economic Forecasting Project.

TEUs increased by 4.2% in 2016; we had forecasted a 4.8% increase. Loaded TEUs increased by 4.8%,; empty TEUs increased by only 1.2%.

2,128.4

2,655.7

0

500

1,000

1,500

2,000

2,500

3,000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Th

ou

san

ds

44

General Cargo Tonnage at the Port of Virginia: 1991 to 2016

Source: Virginia Port Authority and Old Dominion University Economic Forecasting Project.

General Cargo Tonnage increased by 4.5% in 2016; we forecasted a 2.7% increase.

17.73

20.87

0

5

10

15

20

25

199

1

199

2

19

93

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

20

02

200

3

200

4

200

5

200

6

20

07

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

20

16

Millio

ns o

f To

ns

45

Movement of Containers at the Port of Virginia by Type of Transportation: 2011 to 2016

Source: Virginia Port Authority and the Old Dominion University Economic Forecasting Project

Mill

ion

s o

f C

on

tain

ers 1.10

1.21 1.271.37 1.45 1.50

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

2011 2012 2013 2014 2015 2016

Rail

Barge & Truck

TOTAL

Percent of containers moved by rail has gradually increased from 31.9% in 2012 to 36.7% in 2016.

46

Average TEUs per Container Vessel Call 2011 to 2016

Source: Virginia Port Authority and the Old Dominion University Economic Forecasting Project

Nu

mb

er

of

TEU

s

1,158 1,2011,307 1,341 1,410 1,512

0

200

400

600

800

1,000

1,200

1,400

1,600

2011 2012 2013 2014 2015 2016

Average TEU capacity of the largest 10 percent of Container Vessels calling at the port has increased from 5,691 TEUs in 2009 to 9,067 TEUs in 2014 or by 59% and this trend is continuing.

Forecast for 2017

47

Old Dominion University 2017 Forecast for Hampton Roads MSA

2016* 2017 % Change

*Figures for calendar year 2016 include predicted values for Dec. 2016. ** Base year is 2009 48

Nominal Gross Regional

Product$98.96B $103.17B

Real Gross Regional

Product**$86.73B $87.95B +1.41%

Civilian Employment 768,975 772,820 +0.50%

Unemployment Rate 4.59% 4.40%

Taxable Sales $22.21B $22.79B +2.60%

Hotel Revenue $804.70M $840.11M +4.40%

General Cargo Tonnage 20.87M 21.43M +2.70%

Housing Permit Value $846.38M $868.39M +2.60%

49

2017 Regional Summary

• Look for regional economic growth to be below its half-century annual average of 2.6 percent and also below that of the nation.

• The port, health-care industries, and tourism are likely to help the region’s moderate economic expansion in 2017

• Single-family home prices in 2017 are likely to continue to increase at a moderate pace.

– Inventories, sale volume, and days-on-market are all moving in the right direction. Months of supply of existing homes are lower than their historic average.

– Slightly higher Mortgage Rates

• Lingering distressed home volume remains a concern

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Center for Economic Analysis and Policy, Strome College of Business at Old Dominion University

http://www.ceapodu.com/

Old Dominion University2017 National Economic Forecast

January 25, 2017

Larry “Chip” FilerAssociate Professor of Economics

Strome College of Business

www.odu.edu/forecasting

Real GDP Growth United States and Virginia

1.6

1.6 0.5

3.5

-4

-3

-2

-1

0

1

2

3

4

5

6

19

98

19

99

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

Q1

20

16

Q2

20

16

Q3

20

16

Q4

Virginia United States

Source: Bureau of Economic Analysis and Center for Economic Analysis and Policy Forecasts

Total Nonfarm Payroll Employment

129,774

145,303

120,000

125,000

130,000

135,000

140,000

145,000

150,000

1/1

/08

5/1

/08

9/1

/08

1/1

/09

5/1

/09

9/1

/09

1/1

/10

5/1

/10

9/1

/10

1/1

/11

5/1

/11

9/1

/11

1/1

/12

5/1

/12

9/1

/12

1/1

/13

5/1

/13

9/1

/13

1/1

/14

5/1

/14

9/1

/14

1/1

/15

5/1

/15

9/1

/15

1/1

/16

5/1

/16

9/1

/16

+ 15.5 Million Jobs


Percentage Growth in Total Nonfarm EmploymentUnited States and Virginia

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

U.S. VA


Monthly Net Job Creation For Virginia During 2016

-600

14,800

2,800

-10,600

-4,500

7,700 8,400

11,800 11,900

3,500

-9,700

14,100

4,858

-15,000

-10,000

-5,000

-

5,000

10,000

15,000

20,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: Bureau of Labor Statistics and Center for Economic Analysis and Policy Calculations

Rate of Headline Unemployment (U3)United States and Virginia

0

1

2

3

4

5

6

7

8

9

1/1/12 7/1/12 1/1/13 7/1/13 1/1/14 7/1/14 1/1/15 7/1/15 1/1/16 7/1/16

United States Virginia


Labor Force Participation Rates Are Starting to Stabilize

56.0

58.0

60.0

62.0

64.0

66.0

68.0

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

20

20

20

22

20

24

Labor Force Participation BLS Projection


Labor Force Flows from Prior Month

0

1000

2000

3000

4000

5000

6000

1/1

/10

4/1

/10

7/1

/10

10

/1/1

0

1/1

/11

4/1

/11

7/1

/11

10

/1/1

1

1/1

/12

4/1

/12

7/1

/12

10

/1/1

2

1/1

/13

4/1

/13

7/1

/13

10

/1/1

3

1/1

/14

4/1

/14

7/1

/14

10

/1/1

4

1/1

/15

4/1

/15

7/1

/15

10

/1/1

5

1/1

/16

4/1

/16

7/1

/16

10

/1/1

6

Emp. To NLF Unem. To NLF


Virginia Labor Force Participation Rates

69.8

64.8

61.0

62.0

63.0

64.0

65.0

66.0

67.0

68.0

69.0

70.0

71.0

1/1

/06

6/1

/06

11

/1/0

6

4/1

/07

9/1

/07

2/1

/08

7/1

/08

12

/1/0

8

5/1

/09

10

/1/0

9

3/1

/10

8/1

/10

1/1

/11

6/1

/11

11

/1/1

1

4/1

/12

9/1

/12

2/1

/13

7/1

/13

12

/1/1

3

5/1

/14

10

/1/1

4

3/1

/15

8/1

/15

1/1

/16

6/1

/16

11

/1/1

6


The Fed in 2017

• There is an expectation of 3 rate increases during 2017 (75 basis points total). This would leave the Fed Funds Target at the range 1.25% to 1.50% by December.

• Meeting dates in 2017:• Jan/Feb• March• May• June• July• Sept/Oct• December

Fed Dot Chart versus Taylor Rule

Source: Janet Yellen, Speech to Stanford Institute for Economic Policy Research on January 19, 2017.

Treasury Yield Curves

Jan. 2014

Jan. 2015

Jan. 2017

0

0.5

1

1.5

2

2.5

3

3.5

4

1m 3m 6m 1y 2y 3y 5y 7y 10y 20y 30y

Source: US Department of the Treasury

The Trump Administration

• Very difficult to forecast. Campaign rhetoric is always more political and ideological than actual policy proposals.

• A few things we know (or don’t know):

• Repeal of ACA

• Infrastructure Bill

• Immigration reform

• Repeal of Dodd-Frank

• Renegotiation of Trade Agreements

Trump’s Trade Conundrum

-900,000

-800,000

-700,000

-600,000

-500,000

-400,000

-300,000

-200,000

-100,000

-

100,000

0

20

40

60

80

100

120

140

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

$ M

illio

ns

19

97

=10

0

Source: Bureau of Economic Analysis and Board of Governors of the Federal Reserve System

$ Appreciation Trade Deficits

The Current National Recovery

Recession End Expansion Duration

October 1945 80 months

February 1961 106 months

March 1991 120 months

November 2001 73

June 2009 91 (ongoing)

Source: National Bureau of Economic Research

Real GDP Growth ForecastsUnited States and Virginia

1.6

2.2

1.5

2.42.6

1.6

2.2

0.6 0.70.4

0.02

1.4

0.8

1.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2011 2012 2013 2014 2015 2016E 2017F

United States

Virginia

Source: Bureau of Economic Analysis and Center for Economic Analysis and Policy Forecasts

2016 2017

Forecast Actual Forecast

Real Gross Domestic Product 2.03% 1.60% est. 2.2%

Employment Growth 1.50% 1.74% 1.5%

Unemployment Rate 5.1% 4.9% 4.7%

Consumer Price Index 1.34% 1.28% 2.80%

CPI - Core 2.03% 2.21% 2.40%

3-Month Treasury Bill 1.25% 0.32% 1.31%

10-Year Treasury Bond 3.15% 1.84% 3.15%

30-Year Conventional Mortgage Rate 4.25% 3.65% 4.25%

National Economic Outlook for 2017

Documents

Old Dominion University 2017 Regional Economic Forecast€¦ · Sequestration ATRA2012 BBA 2013 BBA 2015 forecast 11 Caps on Department of Defense Discretionary Spending, FY 2012