1. Fairfax Committee of 100 February 24, 2015 The Northern Virginia and Washington Area Regional Economic Outlook David E. Versel, AICP Senior Research Associate Center for Regional Analysis George Mason University

2. The national recovery has been slow and fragile, but is pointing in the right direction

3. Quarters After Trough % Change in GDP* Recession Recovery Patterns of GDP Past Four Recessions Sources: Bureau of Economic Analysis, GMU Center for Regional Analysis *in 1992 or 2009 Chained Dollars

4. Annual Change in Payroll Jobs – US Month-Over-Year (000s) Dec = + 3.0M Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

5. U.S. Payroll Job Change by Sector Dec 2013 – Dec 2014 (000s) Total = 2,951 Ranked by Size in 2014 Source: Bureau of Labor Statistics (Seasonally Adjusted), GMU Center for Regional Analysis

6. Initial Claims for Unemployment 4-Week Moving Average Jan 24 265 Source: Department of Labor (000s)

7. U.S. Unemployment Rate Source: Bureau of Labor Statistics (Seasonally Adjusted), IHS Economics January 8, 2015 Dec = 5.6 % IHS FCST 14 – 6.2 15 – 5.5 16 – 5.3 17 – 5.2 18 – 5.3 19 – 5.3

8. The recession and Federal spending cutbacks have dramatically reshaped the regional economy

9. 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 -178Total 244 Aug 2008-Feb 2010 Feb 2010-Dec 2014

10. The GRP* Effects of Job Change in the Washington Metropolitan Area, Aug 08-Aug 14 (in billions of current year $s) _____________________________ Job Change Average GRP Value - 177,700 - $26,760,932,000 + 231,100 + $24,730,493,000 Net Effect + 53,400 - $2,030,439,000 ____________________________ Source: GMU Center for Regional Analysis *Gross Regional Product

11. Federal Government Washington MSA Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Jul 2010 = 387,500 Dec 2014 = 366,800 (000s) Annual Data Annual Month over Year 2009 2010 2011 2012 2013 2014

12. Federal Procurement in the Washington Metro Area, FY 1980-2014 $ Billions | | | < 01–10 = $564.1 B | TOTAL = $1,164.9 Billion Source: US Census, Consolidated Federal Funds Report and USAspending.gov 2011 79.8 2013 69.1 2014 71.2 76.3 2012

13. Summary for Federal Spending Trends in the Washington Metropolitan Area, 2010-2014 Federal Procurement Outlays declined 16% between FY 2010 and FY 2013. Federal employment has declined since peaking in July 2010, losing 20,700 jobs or 5.3%. Federal payroll is declining and will continue to decline as the workforce shrinks and older workers retire and are replaced by younger workers.

14. Professional & Business Services Washington MSA Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Oct 2012 = 712,800 Dec 2014 = 704,800 (000s) Annual Data Annual Month over Year 2009 2010 2011 2012 2013 2014

15. Washington Metropolitan Area Job Change by Wage Category between 2008 to 2013 Sources: EMSI 2013.3 & GMU Center for Regional Analysis

16. The Washington area economy has struggled in the past two years, particularly in Northern Virginia

17. The Economic Performance of Maryland, DC and the Commonwealth of Virginia in 2013 State GSP Growth 2012-2013US Ranking US1.84% Virginia0.06% 48 th Maryland0.01% 49 th DC* - 0.49% 51 st WMSA - 0.8% 330 th ** _________________________________________________________________________ Source: U.S. Bureau of Economic Analysis *DC’s economy also declined 0.46% in 2012. **out of 381 metro areas

18. 15 Largest Job Markets Job Change: 2012 – 2013 (000s) Washington + 30,300 Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

19. 15 Largest Job Markets GRP Percent Change: 2012 – 2013 Washington -0.8% Source: Bureau of Economic Analysis, GMU Center for Regional Analysis

20. 15 Largest Job Markets Job Change: Dec 2013 – Dec 2014 (000s) Washington +20,800 Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

21. 15 Largest Job Markets Job Change: Dec 2013 – Dec 2014 Washington +0.7% Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

22. Annual Job Change Washington MSA, 2002-2014 (000s) Annual Data Annual Month over Year 2010 2011 2012 2013 2014 Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

23. Job Change by Sector Dec 2013 – Dec 2014 Washington MSA (000s) Total = 20,800 Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

24. Annual Job Change Northern Virginia, 2002-2014 (000s) Annual Data Annual Month over Year 2010 2011 2012 2013 2014 Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

25. Job Change by Sector Dec 2013 – Dec 2014 Northern Virginia (000s) Total 12,100 Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

26. 7.2 – DC 5.6 – U.S. 4.6 – SMD 4.5 – MSA 3.7 - NVA Unemployment Rates in the WMSA By Sub-State Area, 2007-2014 Source: Bureau of Labor Statistics (Region - Not Seasonally Adjusted, US – Seasonally Adjusted)

27. 15 Largest Job Markets Ranked by Unemployment Rate Dec 2014 % US 5.6 Source: Bureau of Labor Statistics (Region - Not Seasonally Adjusted, US – Seasonally Adjusted)

28. The regional housing market is struggling but could be worse

29. Dec = +16.4% Percent Change in Inventories of Existing Homes Month-Over-Year 2000 – 2014, 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.

30. Existing Home Sales Washington MSA Through Dec 2014 12-Month Moving Average Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis

31. Total Listings Per Sale Dec Each Year LDN PG FFX ARL DC MONT PW Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis

32. Median House Sales Price Washington MSA $386.0K Dec 2014 Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis (000s)

33. Average Sales Price Percent Change Washington MSA All Housing Types % Annual Change Annual Change by Month 2010 2011 2012 2013 2014 Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis

34. Average Sales Price Percent Change Northern Virginia All Housing Types % Source: Metropolitan Regional Information Systems (MRIS), GMU Center for Regional Analysis Annual Change Annual Change by Month 2010 2011 2012 2013 2014

35. Growth will return slowly and will look different

36. Oil Prices $ per barrel $/barrel Source: IHS Economics January 8, 2015 Forecast > > > > >

37. Consumer Prices 2001 - 2019 Forecast > > > % Source: Bureau of Labor Statistics, IHS Economics January 8, 2015

38. Interest Rates 2001 - 2019 Forecast > > > Source: IHS Economics January 8, 2015

39. % U.S. Economic Performance Source: Bureau of Economic Analysis, IHS Economics January 8, 2015 Forecast > > > >

40. U.S. Gross Domestic Product Quarterly Change: 2007 – 2015 % Forecast Source: Bureau of Economic Analysis, IHS Economics January 8, 2015

41. 2010 Structure of the Greater Washington Economy Local Serving Activities 34.8% Non-Local Business 12.0 % Total Federal 39.8% Procurement 19.1% Assn 1.8% Hosp. 2.1% Int’l 3.5% Other 1.5% Other Federal 10.7 % Health/Ed. 4.5% Fed Wages & Salaries 10.0% Source: GMU Center for Regional Analysis

42. 2019 Structure of the Greater Washington Economy Local Serving Activities 38.2% Non-Local Business 17.6% Total Federal 28.8% Procurement 13.1% Assn 1.8% Hosp. 2.8% Int’l 4.0% Other 0.6% Other Federal 8.4% Health/Ed. 6.2% Fed Wages & Salaries 7.3% Source: GMU Center for Regional Analysis

43. 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)

44. % 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.

45. Principal Sources of Job and GRP Growth in the Washington Area, 2014-2019 (in thousands) Growth Job % of TotalAverage 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

46. 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

47. Economic struggles present an ongoing challenge to local budgets

48. Real Estate Property Taxes as Share of Total General Fund Revenues, FY2015 Budgets

49. Percent Change in Real Property Assessments, 2009-2014

50. Nonresidential Shares of Property Tax Base, 2005 to 2014

51. Percent Change in Nonresidential Assessed Valuation by Property Type 2009-2014

52. SUMMARY: The national recovery has been slow and fragile, but is pointing in the right direction The recession and Federal spending cutbacks have dramatically reshaped the regional economy The Washington area economy has struggled in the past two years, particularly in NoVa The regional housing market is struggling but could be worse Growth will return slowly and will look different Economic struggles present an ongoing challenge to local budgets

53. Three Key Challenges for The Region’s Future Shortage/mismatch of labor for future jobs Limited supply of suitable housing for migrating workers and newly formed households Need to invest in regional infrastructure, especially transportation

54. Thank You Questions http://cra.gmu.edu @GMU_CRA