Montgomery County Chamber of Commerce November 13, 2013 The Outlook for the U.S. and Washington Area Economies In 2013 and Beyond Stephen S. Fuller, Ph.D. Dwight Schar Faculty Chair and University Professor Director, Center for Regional Analysis George Mason University
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Montgomery County Chamber of Commerce November 13, 2013 The Outlook for the U.S. and Washington Area Economies In 2013 and Beyond Stephen S. Fuller, Ph.D.
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Montgomery County Chamber of Commerce
November 13, 2013
The Outlook for the U.S. and Washington Area Economies
In 2013 and Beyond
Stephen S. Fuller, Ph.D.Dwight Schar Faculty Chair and University Professor
Director, Center for Regional AnalysisGeorge Mason University
The U.S. Economy:Recent Performance and Outlook
The National Economic Climate Four Years Into the Recovery
Head Winds• The sequester• Weaker growth in emerging markets is hurting
manufacturing (exports)• Business is cautious re: hiring and capital spending
The Sequester and Shutdown• $85b reduction in budget authority• $44b in actual spending reductions in FY 2013• $66b in spending reductions in calendar year 2013• Spending cuts lag cuts in budget authority
The National Economic Forecast
• Sequester and payroll tax increases in January may reduce overall GDP growth in 2013 by 1 percentage point.
• DoD spending down 7% in 2013; up 0.8% in 2014• Non-DoD spending down 5.9% in 2013; up 0.4% in
2014.• Sequester replaced in FY 2014 Budget agreement
plus tax increases (caps on deductions) and entitlement reductions beginning in January 2014.
• GDP in 2013 = 1.5%; in 2014 = 2.5%• GDP in 2015 = 3.2%
20012002
20032004
20052006
20072008
20092010
20112012
2013
-8000
-6000
-4000
-2000
0
2000
4000
Annual Change in Payroll Jobs – USMonth-Over-Year
(000s)
Oct =+ 2.3 M
Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis
U.S. Payroll Job Change by SectorOct 2012 – Oct 2013
Information
Federal Govt.
Transp. & Util.
Other Services
Wlse Trade
Construction
Financial
Manufacturing
Leisure & Hosp.
Retail Trade
Prof. & Bus. Svcs
State & Local Govt
Educ & Health Svcs
-600 -400 -200 0 200 400 600
17
-94
55
39
85
231
93
55
444
368
644
68
325
(000s) Total = 2,329Ranked by Size in 2013
Source: Bureau of Labor Statistics (Seasonally Adjusted), GMU Center for Regional Analysis
U.S. Payroll Job Change by SectorSep 2013 – Oct 2013
Information
Federal Govt.
Transp. & Util.
Other Services
Wlse Trade
Construction
Financial
Manufacturing
Leisure & Hosp.
Retail Trade
Prof. & Bus. Svcs
State & Local Govt
Educ & Health Svcs
-100 -80 -60 -40 -20 0 20 40 60 80 100
5
-12
0
6
-5
16
7
19
53
44
44
4
23
(000s) Total = 204Ranked by Size in 2013
Source: Bureau of Labor Statistics (Seasonally Adjusted), GMU Center for Regional Analysis
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
4
5
6
7
8
9
10
11
U.S. Unemployment Rate
Source: Bureau of Labor Statistics (Seasonally Adjusted), IHS Global Insight October 8, 2013
U.S. Gross Domestic ProductQuarterly Change: 2007 – 2015
% Forecast > > > >
Source: Bureau of Economic Analysis, Global Insight October 8, 2013
Federal Spending Trendsin the Washington Area
2010 Structure of the Greater Washington Economy
Local ServingActivities 34.8%
Non-LocalBusiness 12.0 %
TotalFederal 39.8%
Procurement 19.1%
Assn 1.8%
Hosp. 2.1%
Int’l 3.5%
Oth
er 1
.5%
Other Federal 10.7 %
Health/E
d.
4.5%
Fed Wages & Salaries 10.0%
Source: GMU Center for Regional Analysis
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
0
10
20
30
40
50
60
70
80
90
Federal Procurement in theWashington Metro Area, 1980-2012
$ Billions
| < 80-90 = $96.5 B > |
< 91-00 = $207.9 B >| < 01–10 = $563.5 B > |
TOTAL = $1,023.5 Billion
Source: US Census, Consolidated Federal Funds Report
2011
$80.0 B$75.6 B
2012
Professional & Business ServicesWashington MSA
2002
2005
Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct
Jan
Apr
Jul
-20
-15
-10
-5
0
5
10
15
20
25
30
(000s) Annual Data Annual Month over Year
2008 2009 2010 2011 2012 2013
Tot 2012 = 702,300Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
150
200
250
300
350
400
Federal Employment in theWashington Metro Area, 1950-2012
000s Eisenhower Kennedy – Johnson
Nixon - Ford
Carter Reagan Bush 1 Clinton Bush 2
- 5
+ 74
+ 35+ 17 0 -8.6
- 37 + 24
Obama
+17.5
Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis
Federal GovernmentWashington MSA
20022005JanA
prJulO
ctJanA
prJulO
ctJanA
prJulO
ctJanA
prJulO
ctJanA
prJulO
ctJanA
prJul
-20
-15
-10
-5
0
5
10
15
20
25
30
(000s) Annual Data Annual Month over Year
2008 2009 2010 2011 2012 2013
Tot 2012 = 377,400Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis
Summary for Federal Spending Trends in the Washington Metropolitan Area, 2010-2013
• Federal procurement outlays declined 8.4% between FY 2010 and FY 2012 and are projected to decline 5.0% during FY 2013.
• Federal employment has declined by 13,600 or by 3.5% in 24 months between July 2011 and 2013.
• Federal payroll declined by 0.6% between FY 2010 and FY 2011, was flat during FY 2012 and is projected to decline by $2 billion in FY 2013; it will continue to decline slowly as the workforce shrinks (-16,100 federal jobs between 2013 and 2017) and as older workers retire and are replaced by younger workers.
Federal Budget Trends and Outlook (dollars in billions)
Year Annual % Change Budget Deficit
2008 6.8 - $454.8
2009 5.7 -1,415.7
2010 4.3 -1,294.2
2011 - 2.6 -1,296.8
2012 - 1.4 -1,089.2
2013 - 4.9 - 701.0
2014 0.3 -730.7
2015 - 0.6 - 644.4
2016 - 1.2 -596.7
2017 - 0.6 - 638.5
2018 - 0.4 - $670.6Source: IHS Global Insight “US Executive Summary” October 8, 2013
Federal Spending Trends in theWashington Metropolitan Area: 2010-2017
(in billions of current dollars)
Year GRP %Change* Fed $s % GRP Procurement
2010 $425.0 3.0 $169.0 39.8 $82.5
2011 433.7 2.6 168.2 38.8 80.0
2012 447.9 2.4 165.6 37.0 75.6
2013 466.9 2.1 162.7 34.8 71.8
2014 489.8 3.0 161.1 32.9 70.0
2015 517.2 3.6 162.7 31.4 69.3
2016 544.1 3.3 164.3 30.2 69.0
2017 $ 571.8 3.2 $166.8 29.2 $68.6
*real (inflation adjusted) percent change
Source: GMU Center for Regional Analysis
The Washington Economy:Recent Performance and Outlook
Annual Job ChangeWashington MSA, 2002-2013
2002
2005
2008
-80
-60
-40
-20
0
20
40
60
80
100(000s) Annual Data Annual Month over Year
2009 2010 2011 2012 2013
Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis
WMSA Payroll Job Change: Private SectorThe Great Recession and Recovery To Aug 2013
Transp. & Util.
Wlse Trade
Manufacturing
Information
Financial
Other Services
Construction
Leisure & Hosp.
Retail Trade
Educ & Health Svcs
Prof. & Bus. Svcs
-80 -60 -40 -20 0
-3
-7
-12
-14
-10
-6
-55
-11
-1
0
-12
(000s)
Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis
Series1
0 10 20 30 40 50 60 70 80
0
0
0
0
10
8
7
38
18
48
34
Total -131 Total 165
Washington Metropolitan Area Job Change by Wage Category between 2008 to 2013