December 4, 2008 The U.S., Washington & Northern Virginia Economies: Current Performance and Near Term Outlook John McClain, AICP Senior Fellow and Deputy.
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December 4, 2008
The U.S., Washington & Northern Virginia Economies:Current Performance and Near Term Outlook
John McClain, AICPSenior Fellow and Deputy Director,
Center for Regional Analysis, School of Public Policy George Mason University
GDP Percent Change(Real Dollars)
%
CURRENT CONDITIONS
ISM Manufacturing and Non-Manufacturing Indices
Non-Mfg
Mfg
Annual Change in Jobs - US
THOUSANDS
Oct =- 1.18
Source: BLS Establishment Survey
Initial Unemployment Claims
350
Thousands (4-week moving average)
U.S. Unemployment Rate
%
Source: BLS, Seasonally Adjusted
6.5
Consumer Confidence
100
Present Situation
Expectations
Source: Conference Board, GMU Center for Regional Analysis
U.S. Gross Domestic ProductQuarterly Change: 2006 – 2010
%
2006 2007 2008 2009 2010 2011
Source: Global Insight
Forecast > > > > > > > > >
The Washington and Northern Virginia Economies
U.S.Washington Area
GRP Change
3/01 - 11/01 (8) 2.5 %
7/90 - 3/91 (8) 0.2 %
7/81 - 11/82 (16) 3.1 %
1/80 - 7/80 (6) 2.3 %
U.S and Washington Area Recent Recessions
Annual Change in Jobs1991 – 2007
Washington Metro
Source: BLS, GMU Center for Regional Analysis
Thousands
Annual Job ChangeWashington Metro Area
10
56
71
63
50
3529 26 26 27
21
128
1825 27
2125 27
2228 27 27
4045
38 36
0
20
40
60
80
100
20
02
20
03
20
04
20
05
20
06
Ja
nF
eb
Ma
rA
pr
Ma
yJ
un
Ju
lA
ug
Se
pO
ct
No
vD
ec
Ja
nF
eb
Ma
rA
pr
Ma
yJ
un
Ju
lA
ug
Se
pO
ct
Source: BLS, GMU Center for Regional Analysis
Annual Change Annual Month-over-the-Year 2007 2008
000s
15 Largest Job MarketsJob Change Oct. 07– Oct. 08
-60-40-20
020406080
100Thousands
Washington + 35,700
Ranked by Total Jobs
15 Largest Job MarketsRanked by Unemployment Rate
October 2008
0123456789
10%
U.S.6.1
Data not seasonally adjustedSource: BLS, GMU Center for Regional Analysis
4.1
Oct. 2007 – Oct. 2008Job Change By Sector MSA
(000s)
0.90.2
-0.7-2.4
-3.28.2
-5.01.4
-0.611.6
9.94.4
11.0
-10 0 10 20 30
Transp & Util
Wlse Trade
Mfg
Information
Financial
Other Svc
Const
Leisure & Hosp
Retail Trade
St & Loc Gov
Educ & Hlth Svc
Federal
Prof & Bus Svc
Total = 35,800(Ranked by Size of Sector)
Annual Job ChangeNorthern Virginia
-8
13
5345
31
20 17 17 20 20 1913 12 14 14 14
8 8 11 13 11 10 9 12 13 13 10
-10
10
30
50
70
20
02
20
03
20
04
20
05
20
06
Ja
nF
eb
Ma
rA
pr
Ma
yJ
un
Ju
lA
ug
Se
pO
ct
No
vD
ec
Ja
nF
eb
Ma
rA
pr
Ma
yJ
un
Ju
lA
ug
Se
pO
ct
Source: BLS, GMU Center for Regional Analysis
Annual Change Annual Month-over-the-Year 2007 2008
000s
Billions $
Federal Procurement – Northern Virginia
Source: Consolidated Federal Funds Reports, Eagle Eye, Inc., GMU Center for Regional Analysis
+27%
+16%
+16%
The Housing Market
Sales and Total Active ListingsWashington MSA, October Each Year
Listings
Sales
1000s
Units Sold Percent ChangeBy Subregion
All Housing Types%
NVA
MSA
DC
SMD
2007 2008
Units Sold Percent ChangeNorthern Virginia
All Housing Types
PW
LDN
FFX
NVA
%
2007 2008
Median Housing Sales PriceNorthern Virginia
October Each Year, 1998 - 2008
Source: MRIS, GMU Center for Regional Analysis
$
Appreciation = + 4.7%/year for 10 years
$181,000
$459,300
$287,500
Foreclosure ActivityVirginia Metropolitan AreasJuly 15 and Oct 15, 2008
Source: RealtyTrac, GMU Center for Regional Analysis
The Outlook
GDP/GRP 2000 - 2011
Washington Metro
%
U.S.
Employment Change bySub-state Region (000s)
2007 2008 2009 2010 2011 2012 2013
D.C.D.C. 7.27.2 6.6 6.6 5.55.5 6.06.0 6.46.4 7.07.0 6.56.5
Sub. MDSub. MD 5.85.8 6.56.5 6.06.0 10.710.7 12.512.5 14.314.3 16.416.4
No. VANo. VA 15.5 12.5 12.2 19.8 23.5 26.8 31.1
REGION 28.528.5 25.625.6 23.723.7 36.536.5 42.442.4 48.148.1 54.054.0
Average Annual Change 1990-2007 = 44,900
Source: BLS, GMU Center for Regional Analysis
Job Change by Sector, 2008-2013(000s)
SECTOR Washington Metro Area
D.C. Suburban MD
Northern Virginia
Professional, Business Services 109.0 18.9 30.4 59.7
Government 41.2 3.8 14.7 22.7Health, Educ. Svcs. 29.7 5.5 10.4 13.8Other Services 25.2 5.6 5.8 13.8Hospitality 18.4 3.7 5.6 9.1All Other 6.8 .5 -.5 6.8 TOTAL 230.3 38.0 66.4 125.9
• Foreclosures Will Take Time to Work Through – Many Sub-primes Will Have Reset by Early 2009– Alt-As will take much longer– Some Areas Face Danger of Prime Mortgages Going into Foreclosure
Because of Falling Prices
• Fiscal Impacts of Declines in Residential Property Values Will Invoke Large Toll on Government Tax Revenues
• Federal Policy Effects – How Long For Current Actions to Turn the Current Situation?
• Increases in Sales A Sign the Tide is Turning?
• Market Recovery Will be a Mix by Geography – Areas with Good Transportation and Access to Jobs, Recovering Soon, Most Areas Will Take Longer
THE OUTLOOK FOR NORTHERN VIRGINIA’s HOUSING MARKET
• Underlying Economic Fundamentals are Still OK– Federal Procurement Moderating Trend to Continue & Will Grow But
Will Not be the Economic Driver as in the Past – Sectors Related to Housing Market Will Take Some Time to Recover
– Will Depend on Housing Market Recovery– Long-term Prosperity/Recovery Will Require Adequate Workforce,
Workforce Housing, Improved Mobility / Traffic Congestion Relief– Need Long-Term Economic Strategy To Build on Region’s Strengths
& Adjust to Any Shifts in Procurement Policy
• Federal Policy Effects – How Long For Current Actions to Turn the Current Situation?
• Recovering Slowly Late 2009 At National Level ?? – Northern Virginia Jobs Will Continue Slow Growth
THE OUTLOOK FOR NORTHERN VIRGINIA’s ECONOMY
www.cra-gmu.org
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