What Will Drive Growth in the Washington Area …cra.gmu.edu/pdfs/studies_reports_presentations/Fuller_CRA_Annual... · What Will Drive Growth in the Washington Area Economy ... 1950

1/14/2015

GMU Center for Regional Analysis 1

Cardinal Bank & George Mason University23rd Annual Economic Conference

January 15, 2015

What Will Drive Growth in theWashington Area Economy

Going Forward?

Stephen S. Fuller, Ph.D.Dwight Schar Faculty Chair and University Professor

Director, Center for Regional AnalysisGeorge Mason University

1950 2010 2014 2030 20301

NYC

LA

Chi

Phil

Detroit

SF/Oak

Boston

Pitts

Wash

St. Louis

Sources: U.S. Bureau of Economic Analysis; GMU Center for Regional Analysis

Top Ten: How Does the Washington Area Economy Rank, 1950-2030

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1950 2010 2014 2030 20301

NYC NYC

LA LA

Chi Chi

Phil Wash

Detroit Houston

SF/Oak Dallas

Boston Phil

Pitts SF/Oak

Wash Boston

St. Louis Atlanta



1950 2010 2014 2030 20301

NYC NYC NYC

LA LA LA

Chi Chi Chi

Phil Wash Houston

Detroit Houston Wash

SF/Oak Dallas Dallas

Boston Phil SF/Oak

Pitts SF/Oak Phil

Wash Boston Boston

St. Louis Atlanta Atlanta



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1950 2010 2014 2030 20301

NYC NYC NYC NYC

LA LA LA LA

Chi Chi Chi Chi

Phil Wash Houston Houston

Detroit Houston Wash Dallas

SF/Oak Dallas Dallas Wash

Boston Phil SF/Oak Atlanta

Pitts SF/Oak Phil Miami

Wash Boston Boston Phoenix

St. Louis Atlanta Atlanta Boston



1950 2010 2014 2030 20301

NYC NYC NYC NYC NYC

LA LA LA LA LA

Chi Chi Chi Chi Dallas

Phil Wash Houston Houston Wash

Detroit Houston Wash Dallas Houston

SF/Oak Dallas Dallas Wash Chi

Boston Phil SF/Oak Atlanta Atlanta

Pitts SF/Oak Phil Miami

Wash Boston Boston Phoenix

St. Louis Atlanta Atlanta Boston 12009 forecast



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From Company Town

To Global Business Center

2010 Structure of the

Greater Washington Economy

Local ServingActivities

34.8%

Non-LocalBusiness12.0 %

Total

Federal

39.8%Procurement

19.1%

Other Federal10.7 %

Fed Wages & Salaries 10.0%

Source: GMU Center for Regional Analysis

1/14/2015





38.2%

Non-LocalBusiness17.6%

Total

Federal

28.8%Procurement

13.1%

Other Federal8.4%



From the Recession to the

Federal Sequester and Shutdown

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WMSA Payroll Job Change: Private SectorThe Great Recession and Recovery

-4

-7

-10

-12

-10

-8

-48

-34

-23

0

-23

-80 -60 -40 -20 0

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

Educ & Health Svcs

Prof. & Bus. Svcs

(000s)

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

Total -178

Aug 2008-Feb 2010

The GRP* Effects of Private Sector Job Change in the Washington Metropolitan Area

Aug 2008-Feb 2010 (in 2014 $s) ____________________________

Job Change Total GRP Value

- 177,700 - $28,467,350,0001

____________________________Source: GMU Center for Regional Analysis

*Gross Regional Product1 $156,199 per job contribution to GRP

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WMSA Payroll Job Change: Private SectorThe Great Recession and Recovery

-4

-7

-10

-12

-10

-8

-48

-34

-23

0

-23

-80 -60 -40 -20 0

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

Educ & Health Svcs

Prof. & Bus. Svcs

(000s)


4

2

11

12

25

58

39

49

44

0 20 40 60 80

Total -178 Total 243

Aug 2008-Feb 2010 Feb 2010-Nov 2014

The GRP* Effects of Private Sector Job Change in the Washington Metropolitan Area

Aug 2008-Nov 2014 (in 2014 $s) ____________________________

Job Change Total GRP Value

- 177,700 - $28,467,350,0001

+ 242,400 + $27,483,800,0002

+ 64,700 - $983,550,000

____________________________Source: GMU Center for Regional Analysis

*Gross Regional Product1 $156,199 per job contribution to GRP2 $113,382 per job contribution to GRP

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Summary of Federal Spending Trends in the Washington Metropolitan Area, 2010-2013

• Federal Procurement Outlays declined $13.3 billion or 16.1% between FY 2010 and FY 2013.

• Federal employment has declined since peaking in July 2010, losing 21,800 jobs or 5.6%.

• Federal payroll declined by $2.4 billion or 5.7% between FY 2010 and FY 2014 and will continue to decline as the workforce shrinks and older workers retire and are replaced by younger workers.

150

200

250

300

350

400

195

0

195

5

196

0

196

5

197

0

197

5

198

0

198

5

199

0

199

5

200

0

200

5

201

0Federal Employment in the

Washington Metro Area, 1950-2014000s Eisenhower Kennedy –

Johnson

Nixon -Ford

Carter Reagan Bush 1 Clinton Bush 2

- 5

+ 74

+ 35+17 0 +8 - 55

+ 23

Obama

+21

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

-17

=+4

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Year Total Federal %

1950 592.4 227.2 38.4

1960 745.7 236.2 31.7

1970 1,184.6 321.7 27.2

1975 1,336.8 347.0 26.0

1980 1,937.9 367.7 19.0

2000 2,679.3 326.2 12.2

2010 2,966.6 380.2 12.8

2020 3,379.4 340.9 10.1

Sources: U.S. Bureau of Labor Statistics; GMU Center for Regional Analysis

Federal Employment as a Percentageof Total Employment in Washington

1950-2020 (jobs in thousands)

Federal Government Jobs in theWashington Metropolitan Area, 2002-2014

-20

-15

-10

-5

0

5

10

15

20

25

30

200

2

200

5

200

8

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

(000s)

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Nov-14 Total: 365.7

Annual Data Annual Month over Year

2009 2010 2011 2012 2013 2014

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0

10

20

30

40

50

60

70

80

90

Federal Procurement in theWashington Metro Area, FY 1980-2014

$ Billions

TOTAL = $1,164.9 Billion

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

79.8

69.171.2

76.3

Professional & Business Services Jobsin the Washington Metropolitan Area, 2002-2014

-20

-15

-10

-5

0

5

10

15

20

25

30

200

2

200

5

200

8

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

De

c

Ma

r

Jun

Se

p

(000s) Annual Data Annual Month over Year

2009 2010 2011 2012 2013 2014

Nov-14 Total: 708.5Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

1/14/2015


44.1 48.6

58.1 $94.2

$51.4

$24.1

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Professional &Business Services

Education & HealthServices

Leisure & Hospitality

2/2010-11/2014 Job Change(left axis)

2013 Wage(right axis)

Source: Bureau of Labor Statistics, GMU Center for Regional Analysis

Average Wage and Job Change Washington Metro Area

(000s)(000s of 2013 $s

63.0 63.0 63.9

65.5 66.2

67.1

68.2

67.8

69.5

70.6 69.8

69.3 68.3

58.0

60.0

62.0

64.0

66.0

68.0

70.0

72.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Average Wages in the Washington Metro Area, 2001-2013

(000s of 2013 $s)

Source: Bureau of Labor Statistics, GMU Center for Regional Analysis

1/14/2015


The Household Income Effects of Structural Change in the Washington Metropolitan Area

_____________________________________________________________________________________

Jurisdiction Median HH Income 2013* Change from 2009*

District (DC) $67,575 $2,919

Frederick Cty 84,308 - $5,856

Montgomery Cty 98,326 - $4,552

Prince George’s Cty 72,052 - $4,060

Arlington County 102,501 - $1,675

Fairfax County 111,079 - $249

Loudoun County 116,768 - $7,283

Prince Wm County 95,268 - $2,234

Alexandria City 86,775 $2,985

Total Metro Area $90,149 - $2,287______________________________________________________________________________________

Source: U.S. Census, ACS 1-Year; GMU Center for Regional Analysis *in 2013 dollars

15 Largest Metro Area Job MarketsGRP Percent Change: 2012 – 2013

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Washington -0.8%

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

1/14/2015


Job Change in the 15 Largest Metropolitan Areas: 2009 –2010

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%Washington +0.4%


Job Change in the15 Largest Metropolitan Areas: 2010 –2011

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%



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Job Change in the15 Largest Metropolitan Areas: 2011 –2012

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%



Job Change in the15 LargestMetropolitan Areas: 2012-2013

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%



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The Washington Region’sEconomy at the End of 2014

Job Change in the 15 LargestMetropolitan Areas:Nov 2013 – Nov 2014

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%



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Job Change in the 15 LargestMetropolitan Areas: Nov 2013 – Nov 2014

-20

0

20

40

60

80

100

120

140(000s)

Washington +18,900


Annual Job Change in theWashington Metropolitan Area, 2002-2014

-80

-60

-40

-20

0

20

40

60

80

100

200

2

200

5

200

8

(000s)Annual Data Annual Month over Year

2010 2011 2012 2013 2014


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Job Change in the WashingtonMetropolitan Area by Sector

Nov 2013 – Nov 2014

0

2

-3

-3

4

1

4

3

3

8

-2

-4

5

(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 = 18,900


Job Change in the WashingtonMetropolitan Area by Sector

Oct 2014 – Nov 2014

1

0

-1

0

0

0

0

-2

10

3

1

0

5

(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 = 18,600


1/14/2015


Job Change in the District of Columbiaby Sector, Nov 2013 - Nov 2014

0

0

0

0

0

0

1

1

3

2

1

-1

6

(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 12,600


Job Change in the District of Columbiaby Sector, Oct 2013 – Nov 2014

0

0

0

0

0

0

0

-1

1

0

-1

0

1

(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 1,400


1/14/2015


Job Change in Suburban Marylandby Sector, Nov 2013 – Nov 2014

1

0

-1

-1

1

0

-3

2

0

3

3

-1

2

(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 4,300


Job Change in Suburban Marylandby Sector, Oct 2014 – Nov 2014

1

0

0

0

0

0

0

-1

3

1

0

0

0

(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 3,800


1/14/2015


Job Change in Northern Virginia by Sector, Nov 2013 – Nov 2014

-1

0

0

-1

2

1

3

-1

1

6

2

-1

-4

(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 6,500


Job Change in Northern Virginia by Sector, Oct 2014 – Nov 2014

0

0

0

1

0

0

-1

0

7

2

1

1

3

(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 13,600


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Rankings by the Association of Foreign Investors in Real Estate, January 2015

Top 5 Global Cities2008 2009 2010 2011 2012 2013 2014 2015

New York 1 3 3 1 1 1 2 1

London 2 2 1 3 2 2 1 2

San Francisco - - - - 5 3 3 3

Tokyo - 4 5 - - - - 4

Madrid - - - - - - - 5

Washington, D.C. 2 1 2 2 3 4 - -Source: Association of Foreign Investors in Real Estate, January 8, 2015; GMU Center for Regional Analysis

Rankings by the Association of Foreign Investors in Real Estate, January 2015

Top 5 U.S. Cities2008 2009 2010 2011 2012 2013 2014 2015

New York 1 2 2 1 1 1 1 1

San Francisco 4 3 3 4 3 2 2 2

Houston - 5 - - - 4 3 3

Los Angeles 3 4 5 5 5 - 5 4

Washington, D.C. 2 1 1 2 2 3 4 5

Boston - - 4 3 4 5 - -Source: Association of Foreign Investors in Real Estate, January 8, 2015; GMU Center for Regional Analysis

1/14/2015


“. . . [U]nlike other cities which currently have technology and energy drivers, D.C. mostly depends on the U.S. government to keep occupancy in balance; given the current situation, Washington area real estate is the short-term, unintended victim of Federal budget tightening. On a long-term basis, Washington, as the capital city of the free world, remains a very attractive opportunity.”

-- James A. Fetgatter,Chief Executive, Association of Foreign Investors in Real EstateJanuary 8, 2015

Source: Association of Foreign Investors in Real Estate, GMU Center for Regional Analysis

The Washington Region’sEconomy of the Future

1/14/2015


Year U.S. WMSA

2013 2.2 - 0.8

2014 2.4 0.7

2015 3.1 1.4

2016 2.7 1.9

2017 2.7 2.4

2018 2.4 2.9

2019 2.8 3.2

Sources: IHS Economics, Inc. January 2015 ; GMU Center for Regional Analysis

Washington Metropolitan Area and U.S. Economic Growth

2012-2019 (annual percent real change)

-4

-2

0

2

4

%

Source: IHS Economics, GMU Center for Regional Analysis, Forecast: January 2015

U.S. GDP and Washington Area GRP 2007 – 2015 – 2019

(Annual % Change)

Washington

U.S.

1/14/2015


Principal Sources of Job and GRP Growth in the Washington Area, 2014-2019

(in thousands)

Growth Job % of Total Average Value

Sectors Change Job Change Added per Job*

Prof. & Bus. Ser. 114.4 48.3 $157,969

Construction 48.8 20.5 $111,992

Education/Health 28.7 12.1 $72,162

Hospitality Services 27.1 11.4 $51,110

State and Local 20.2 8.5 $81,736

Sub-Total 239.2 100.8 $119,749

Overall Total 236.9 100.0 $154,131

Sources: IHS Global Insight; GMU Center for Regional Analysis *in 2014$s

Job and GRP Gains and Losses for the Washington Area’s Other Sectors, 2014-2019

(in thousands) Job % of Total Average Value

Change Job Change Added per Job*

Federal Gov’t - 22.3 - 9.4 $185,804

Retail Trade 0.5 0.2 $64,478

Other Services 2.6 1.1 $86,150

Financial Services - 0.1 0.0 $620,922

Information Services 2.0 0.9 $410,371

Manufacturing 0.0 0.0 $249,934

Transportation 8.8 3.7 $203,015

Wholesale Trade 6.2 2.6 $215,783

Sub-Totals - 2.3 - 0.9 $197,811

Overall Total 236.9 100.0 $154,131

Sources: IHS Economics, Inc.; GMU Center for Regional Analysis *in 2014 $s

1/14/2015


Rethinking The Regional Economy’s Future

• Exports are key to growing the economyScientific and Technical ServicesHigher Ed and Health ServicesManufacturingAgriculture and Natural ResourcesLeisure and HospitalityForeign Direct Investment

• Growing high-value added employment builds the residentially based economy and strengthens the tax base.

Fresh Approaches For Economic Development

• Identify the region’s principal non-federally dependent economic assets and focus marketing strategies on these sources of future growth;

• Unify local and regional approaches to economic development to reduce their conflicting messages and predatory practices;

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High-Value Added EconomicDevelopment Targets of Opportunities

• Redevelop Union Station into a 21st Century transportation, employment and residential center;

• Grow Dulles Airport into a center for global business building on connectivity to regional, national and world economies;

• Develop the Washington region as a global medical complex;

• Implement the White Oak Science Gateway Plan centered on FDA;

• Market the Washington region as a world-class cultural and sports visitor destination;

• Capitalize on the region’s federal labs and centers: Fort Belvoir, Fort Meade/NSA, NASA, Cybersecurity/FBI, NIH/FDA/BioTech;

• Accelerate Prince Wm Cty/GMU Innovation /Technology Center.

•• Strengthen the business-to-business

base in the region and local jurisdictions by reducing the unproductive public costs of business operations;

• Re-brand the region’s and local jurisdictions’ economic development images and business investment climates to build on their competitive assets in the national and global

economies;

1/14/2015


• Invest in the region’s and local jurisdictions’ infrastructure to strengthen their competitive positions; and,

• Increase the capacity of the region’s educational and skills training institutions to respond to the workforce development requirements for on-going up-skilling of current workers and to prepare new-to-the-labor market workers for the Region’s

new and emerging economies.

-2

-1

0

1

2

3

4

5

6

%

Source: GMU Center for Regional Analysis, Forecast: January 2015

Economic Outlook (GRP), 2007-2019Washington Area and Sub-State Areas

(Annual % Change)

DC

SM

MSANV

1/14/2015





38.2%

Non-LocalBusiness17.6%

Total

Federal

28.8%Procurement

13.1%

Other Federal8.4%



Becoming a Global Business

Center does not happen without:

• strong public and private

sector leadership, and

• increased investment in public

infrastructure, workforce

development and private

sector productive capacity

reflecting new technologies.

1/14/2015


Thank You & Questions

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What Will Drive Growth in the Washington Area …cra.gmu.edu/pdfs/studies_reports_presentations/Fuller_CRA_Annual... · What Will Drive Growth in the Washington Area Economy ... 1950