covid-19 in virginia: economic impact assessment...3.1 3.3 3.5 3.7 3.9 4.1 4.3 q1 '20 q2...
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Downtown Charlottesville
WORKING DRAFT
COVID-19 IN VIRGINIA: ECONOMIC IMPACT ASSESSMENT
June 29, 2020
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▪ VEC
▪ DHCD
▪ VDACS
▪ Virginia Department of Forestry
▪ Virginia Marine Products Board
▪ SBSD/VSBFA
▪ SCHEV
▪ VCCS
▪ TAX
▪ VDOT
▪ VHDA
▪ VTC
MANY STATE AGENCIES HAVE CONTRIBUTED INSIGHTS AND/OR DATA THAT HAVE INFORMED THIS IMPACT ANALYSIS*
1*VEDP takes ownership for any errors
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*** PLEASE NOTE ALL ESTIMATES IN THIS DOCUMENT ARE PRELIMINARY AND SUBJECT TO SUBSTANTIAL REVISION ***
2
National economic forecast
3
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UNPRECEDENTED ECONOMIC SHOCK: FORECASTERS PREDICT SHARP DOWNTURN IN 2020 (ESPECIALLY CURRENT QUARTER)
Source: Moody’s Analytics (June baselines); Wells Fargo (June forecast); IHS Markit (June update); Wall Street Journal (June survey); VEDP analysis
Quarterly real GDP growthAnnualized % change, billions of chained 2012 $
4
-50.00
-40.00
-30.00
-20.00
-10.00
0.00
10.00
20.00
30.00
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4
Actual Moody's (US) Moody's (VA) Wells Fargo (US) IHS Markit (US) WSJ Consensus (US)
National spread for 2020Q2:
-32.6% to -41.9%
*2020Q1 actual for US only
(preliminary BEA release)
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MAJORITY OF ECONOMISTS SURVEYED BY WALL STREET JOURNAL BELIEVE THE RECOVERY IS STARTING, BUT WILL BE GRADUAL
Source: Wall Street Journal; University of Washington’s IHME; VEDP analysis 5
22.8%
68.4%
1.8%3.5%
1.8% 1.8%
2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3
When do you expect the economic recovery to start?Survey of 60 economists by WSJ, June 1, 2020
69.0%
8.6%
1.4%
6.9%
1.7%
"Nikeswoosh"
W-shaped V-shaped U-shaped L-shaped
What will and economic recovery look like?Survey of 60 economists by WSJ, June 1, 2020
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CURRENT FORECASTS DIFFER ON EXTENT OF DAMAGE AND RECOVERY TRAJECTORY, BUT ALIGN BY END OF 2021
100
110
120
130
140
150
160
Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21
Actuals IHS Markit Moody's Wells Fargo* CBO Average
*Wells Fargo publishes average monthly change by quarter. Quarterly estimate derived by tripling average monthly change
Source: Moody’s Analytics (June baseline); IHS Market (June forecast); Wells Fargo (June forecast); Congressional Budget Office (May 2020); VEDP analysis
Quarterly U.S. employment estimates from select macroeconomic forecastersTotal nonfarm payroll employment, 2019 – 2021, Millions of jobs
6
2020Q1 employment
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HALF OF JOBS LOST IN VIRGINIA MAY NOT BE REGAINED UNTIL EARLY 2021, WITH FULL RECOVERY POSSIBLE BY THE END OF 2022
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23
IHS Markit Moody's Average
1IHS forecast estimates are based on national forecasts that have been applied to Virginia employment mix by VEDP
Source: Moody’s Analytics (June baseline); IHS Markit (June forecast); VEDP analysis
Quarterly Virginia employment estimates from select macroeconomic forecastersTotal nonfarm payroll employment, 2019 – 2023, millions of jobs
7
2020Q1 employment
32%
employment
recovery
51%
employment
recovery
74%
employment
recovery
100%
employment
recovery
1
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FORECASTS SUGGEST POST-C19 RECOVERY WILL BE SIGNIFICANTLY QUICKER THAN AFTER GREAT RECESSION
60
65
70
75
80
85
90
95
100
105
110
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10Q11Q12Q13Q14Q15Q16Q17Q18Q19Q20Q21Q22Q23Q24Q25Q26
IHS / Moody's average Great Recession
+
Post-Great Recession
100%
employment
recovery
(6.25 yrs)
Source: Bureau of Labor Statistics, Current Employment Survey (historic); Moody’s Analytics (June baseline); IHS Markit (June forecast); VEDP analysis
Timeline of job loss recovery post-Great Recession compared to post-C19 current forecastsHistoric quarterly U.S. employment, 2009-2014, compared to Moody’s/IHS Markit forecasts average, 2020-2026, indexed
8
Post-C19
100%
employment
recovery
(3.0 yrs)
Impact
to date
9
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AFTER SPIKING IN EARLY MARCH, CONSUMER SPEND IN VA HAS BEEN BELOW 2019 LEVELS FOR THE PAST THREE MONTHS
Source: Earnest Research (longitudinal panel of 6 million de-identified U.S. consumers)
Virginia and national consumer spending trends by weekYear-over-year weekly change in total spending, 2019/2020, weeks 8 – 24
10
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Week08
Week09
Week10
Week11
Week12
Week13
Week14
Week15
Week16
Week17
Week18
Week19
Week20
Week21
Week22
Week23
Week24
VA US
Spike in consumer
spending at onset of
pandemic
Drop in consumer
spending as stay-at-
home orders take effect
February March April May June
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CONSUMER SPENDING IN VIRGINIA THIS YEAR HAS DROPPED ACROSS MOST CATEGORIES, BUT SOME HAVE SEEN GROWTH
37%
19%
14%
8%
8%
6%
2%
-1%
-1%
-2%
-3%
-6%
-6%
-7%
-9%
-13%
-18%
-21%
-24%
-28%
-38%
-41%
Specialty Food and Beverage
Home
Grocers
Hobbies and Toys
General Merchandise
Pets
Healthcare and Insurance
Electronics
Charitable Giving
Telecommunication
Specialty
Shipping
Sporting Goods
Restaurants
Media and Entertainment
Occasion and Gifts
Health and Beauty
Transportation
Apparel and Accessories
Department Stores
Children
Travel
Source: Earnest Research (longitudinal panel of 6 million de-identified U.S. consumers)
COVID impact on Virginia consumer spendingYear-to-date change in total spending, 2019/2020, weeks 1 - 24
11
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RECENT INCREASES IN CONSUMER SPENDING ACTIVITY DRIVEN BY ONLINE SALES IN VIRGINIA, AS IN-STORE TRANSACTIONS STAGNATE
-30
-20
-10
0
10
20
30
40
Week08
Week09
Week10
Week11
Week12
Week13
Week14
Week15
Week16
Week17
Week18
Week19
Week20
Week21
Week22
Week23
Week24
Online
In-store
Source: Earnest Research (longitudinal panel of 6 million de-identified U.S. consumers)
Growth in Virginia sales transactions by channelYear-over-Year weekly change in transactions, 2019/2020, weeks 8 - 24
12
February March April May June
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OVER 850,000 VIRGINIANS HAVE FILED INITIAL UNEMPLOYMENT CLAIMS SINCE THE BEGINNING OF MARCH
1For Virginia UI numbers, Pandemic Unemployment Assistance (PUA) claims are included in total claims reported
Source: Virginia Employment Commission; VEDP analysis
Weekly UI initial claims1 in VirginiaYTD weekly claims (through June 20, 2020), NSA
13
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
1-4 1-18 2-1 2-15 2-29 3-14 3-28 4-11 4-25 5-9 5-23 6-6 6-20 7-4 7-18
Weekly claims Cumulative claims since March
We
ekly
UI cla
ims
Week ending
June 20
Cu
mu
lative
initia
l U
I cla
ims
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CONTINUED CLAIMS HAVE BEGUN TO SLOWLY FALL OVER THE PAST MONTH, EVEN AS WEEKLY INITIAL CLAIMS REMAIN AT HISTORIC HIGHS
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
Cumulative weekly claims Continued claims
1For Virginia UI numbers, Pandemic Unemployment Assistance (PUA) claims are included in total claims reported
Source: Virginia Employment Commission
Cumulative UI initial claims1 and continued claims in VirginiaMarch 14 – June 20, 2020, NSA
14
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CLAIMS BY INDUSTRY: THREE INDUSTRIES ACCOUNT FOR THE MAJORITY OF INITIAL UI CLAIMS TIED TO SPECIFIC INDUSTRIES
Numbers doe not add up to cumulative total on previous slides due to data availability issues (e.g. interstate claims)
1For Virginia UI numbers, Pandemic Unemployment Assistance (PUA) claims are included in total claims reported
Source: Virginia Employment Commission; VEDP analysis 15
UI initial claims1 by industryMarch 14 to June 20, 2020, NSA
159,373
104,500
93,690
66,605
46,247
46,198
32,070
28,765
23,826
23,595
22,478
13,451
9,009
8,511
7,368
7,230
3,382
1,151
1,060
193
178,783
Accommodation and food services
Retail trade
Health care and social assistance
Administrative and waste services
Manufacturing
Other services
Professional and technical services
Educational services
Transportation and warehousing
Construction
Arts, entertainment, and recreation
Wholesale trade
Real estate and rental and leasing
Information
Public administration
Finance and insurance
Management of companies and…
Mining
Ag, forestry, fishing and hunting
Utilities
Unknown
18%
12%
11%
8%
5%
5%
4%
3%
3%
3%
3%
2%
1%
1%
1%
1%
<1%
<1%
<1%
<1%
20%
Percentof total
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CLAIMS BY OCCUPATION: UNEMPLOYMENT CLAIMS HAVE BEEN CONCENTRATED IN A HALF DOZEN OCCUPATIONS
Numbers doe not add up to cumulative total on previous slides due to data availability issues (e.g. interstate claims)
1For Virginia UI numbers, Pandemic Unemployment Assistance (PUA) claims are included in total claims reported
Source: Virginia Employment Commission (UI claims); Bureau of Labor Statistics, OES (avg. wages); VEDP analysis 16
UI initial claims1 by occupationMarch 4 to June 20, 2020, NSA
22,290
37,650
28,190
25,040
31,500
126,180
35,720
66,200
27,490
51,400
43,600
55,640
48,650
26,470
78,780
99,170
42,750
47,040
85,550
75,820
89,260
32,610
N/A
Med. wages2019, $
96,834
84,141
74,099
66,920
57,843
57,792
37,563
31,430
31,324
27,397
26,858
24,643
24,131
22,855
17,944
14,812
8,577
8,572
7,323
4,869
3,080
1,742
116,727
Food Prep & Serving
Office & Admin Support
Sales & Related
Personal Care & Service
Transport & Material Moving
Management
Production
Healthcare Pract. & Technical
Healthcare Support
Construction and Extraction
Installation, Maint, & Repair
Arts, Design, Ent, Sports, & Media
Ed Instruction & Library
Building & Grounds Cleaning and Maint
Business & Financial Operations
Computer & Mathematical
Protective Service
Community & Social Service
Architecture & Engineering
Life, Physical, & Social Science
Legal
Farming, Fishing, & Forestry
Unknown
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INITIAL UNEMPLOYMENT CLAIMS HAVE VARIED SIGNIFICANTLY ACROSS VIRGINIA REGIONS
Numbers doe not add up to cumulative total on previous slides due to data availability issues (e.g. interstate claims)
1For Virginia UI numbers, Pandemic Unemployment Assistance (PUA) claims are included in total claims reported
Source: U.S. Department of Labor; BLS Current Population Survey; Emsi 2020.1; VEDP analysis 17
UI initial claims and baseline unemployment as % of baseline jobsMarch 4 to June 20, 2020, NSA, baseline = January 2020
15.5 25.8
State avg
19.0%
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TO DATE, EMPLOYMENT IN VIRGINIA HAS NOT BEEN HIT AS HARD BY COVID-19 AS MOST OTHER STATES
1Does not include Pandemic Unemployment Assistance claims due to inconsistent reporting standards
Source: U.S. Department of Labor; BLS Current Population Survey; Emsi 2020.1; VEDP analysis 18
UI initial claims1 and baseline unemployment as % of baseline jobsMarch 4 to June 20, 2020, NSA, baseline = January 2020
10.7 52.5
US avg
25.4%
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AT PEAK IMPACT IN APRIL, U.S. NONFARM PAYROLL EMPLOYMENT1
DROPPED BY 21.1 MILLION JOBS ON NET FROM JANUARY
3.8
55.0
243.0
258.0
369.0
591.7
962.0
977.0
1,299.0
1,356.0
2,148.7
2,191.0
2,593.0
8,093
Utilities
Mining and logging
Financial activities
Information
Wholesale trade
Transportation and warehousing
Construction
Government
Other services
Manufacturing
Retail trade
Professional and business services
Education and health services
Leisure and hospitality
1 Nonfarm payroll does not include certain categories of workers, like agricultural workers and self-employed
Source: Bureau of Labor Statistics, Current Employment Statistics, May 2020
U.S. job loss by supersectorThousands of jobs, SA, January – April 2020 jobs loss
19
1%
8%
3%
9%
6%
10%
13%
4%
22%
11%
14%
10%
11%
48%
Job loss as a percentageof January 2020 employment
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DURING THAT SAME PERIOD, VIRGINIA BUSINESSES SHED ~430K NONFARM PAYROLL JOBS1 ON NET
0.4
0.8
1.1
1.6
7.3
7.6
10.5
25.4
28.1
48.9
52.1
68.5
181.6
Mining and logging
Information
Financial activities
Wholesale trade
Transportation and utilities
Construction
Manufacturing
Other services
Government
Professional and business services
Retail trade
Education and health services
Leisure and hospitality
1 Nonfarm payroll does not include certain categories of workers, like agricultural workers and self-employed
Source: Bureau of Labor Statistics, Current Employment Statistics, SAE Program, May 2020
Virginia job loss by supersectorThousands of jobs, SA, January – April 2020 jobs loss
20
5%
1%
1%
1%
5%
4%
4%
12%
4%
6%
13%
12%
43%
Job loss as a percentageof January 2020 employment
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MAY JOBS REPORT SHOWED ~2.5M NET JOB GAIN NATIONALLY, SMALLER BUMP IN VIRGINIA WHERE FEWER JOBS HAVE BEEN LOST
115
120
125
130
135
140
145
150
155
Jan2020
Feb2020
Mar2020
Apr2020
May2020
Source: Bureau of Labor Statistics, Current Employment Statistics, May 2020
U.S. Nonfarm payroll employmentJanuary – May 2020, millions of jobs, SA
21
75
80
85
90
95
100
105
Jan2020
Feb2020
Mar2020
Apr2020
May2020
US Virginia
U.S. & Virginia nonfarm employment trends in comparisonJanuary – May 2020, SA, indexed to 100
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UNEMPLOYMENT RATES ALSO FELL IN MAY, NATIONALLY AND IN VIRGINIA
-
5
10
15
20
25
Jan2020
Feb2020
Mar2020
Apr2020
May2020
1 Correction of misclassification error for some respondents absent from work due to ‘other reasons’
Source: Bureau of Labor Statistics, Current Population Survey, Local Area Unemployment Statistics, May 2020
U.S. unemployment rateJanuary – May 2020, % labor force unemployed, *NSA*
22
0
5
10
15
20
25
Jan2020
Feb2020
Mar2020
Apr2020
May2020
Unemployment rate (U-3) Corrected rate
Virginia unemployment rateJanuary – May 2020, % labor force unemployed, *NSA*
1
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JOB GAINS WERE PRIMARILY DRIVEN BY REOPENING OF SERVICE SECTOR: LEISURE & HOSPITALITY WAS ~50% OF NET JOB GAIN IN MAY
Leisure & hospitality
+1,239
Construct-
ion
+464
Retail
Trade
+368
Government
-585
Source: Bureau of Labor Statistics, Current Employment Statistics, May 2020
Month-on-month U.S. job loss or gain by supersectorChange over previous month, thousands of jobs, SA, April / May 2020
23
Other
Services
+272
Prof & business
services
+127
Manufacturing
+225
-664.4 +3,173
Information
-38
Education
& health
+424
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EVEN AFTER GAINS IN MAY, NATIONAL EMPLOYMENT IN ALL SUPERSECTORS REMAINS BELOW JANUARY 2020 LEVELS
-60.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
Feb2020
Mar2020
Apr2020
May2020
Utilities
Financial activities
Wholesale trade
Government
Construction
Manufacturing
Education & health services
Professional & business services
Transportation & warehousing
Information
Mining and logging
Retail trade
Other services
Leisure & hospitality
Source: Bureau of Labor Statistics, Current Employment Statistics, May 2020
U.S. employment change from January 2020 by supersector% change from January 2020 employment, SA
24
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S
DESPITE OVERALL POSITIVE TRENDS, UNEMPLOYMENT RATES ARE NOT FALLING FOR ALL GROUPS OF WORKERS…
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
Jan-20 Feb-20 Mar-20 Apr-20 May-20
Hispanic/Latino
Black/African American
Asian
White
Source: Bureau of Labor Statistics, Current Population Survey, May 2020
U.S. unemployment rate by race / ethnicityJanuary – May 2020, % labor force unemployed, SA
25
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…AND MOST JOB GAINS IN MAY LIKELY CAME FROM WORKERS ON TEMPORARY LAYOFF, PERMANENT LAYOFFS CONTINUED TO RISE
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Jan-20 Feb-20 Mar-20 Apr-00 May-20
Not on temporary layoff On temporary layoff
Source: Bureau of Labor Statistics, Current Population Survey, May 2020
Temporary and permanent job losersU.S. unemployed by category, thousands of unemployed, SA
26
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S
BEYOND THE ~20M STILL UNEMPLOYED NATIONALLY, TENS OF MILLIONS MORE HAVE BEEN NEGATIVELY IMPACTED BY PANDEMIC
1 Change in multiple job-holders between January and May 2020
Source: Bureau of Labor Statistics, Current Population Survey; VEDP analysis
Persons by category Thousands of persons, SA, May 2020
27
Persons actively
seeking employment
5,683
Unemployed In workforce Outside labor force
1
VEDP estimates
28
29NO
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AT OUTSET OF CRISIS, VEDP ESTIMATED ROUGHLY 660K-1M JOBS IN VA COULD BE LOST DUE TO DIRECT, INDIRECT, & INDUCED IMPACT
* Assumes additional flexible federal budget support
Source: Emsi 2020.1; VEC UI claims; information from Data Compilation workgroup of Virginia Economic Strike Force; interviews with Virginia businesses and stakeholders; review of national economic forecasts, research, and press; VEDP analysis 29
Sector% of all VA jobs
Number of jobs lost in sector660K to 1M overall
- 100,000 200,000 300,000 400,000
Hospitality & Entertainment 10%
Repair, personal, home svcs. 3%
Employment, admin support svcs. 6%
Real estate, rental & leasing 2%
Retail trade 9%
Transportation & warehousing 3%
Educational Services 2%
Healthcare 7%
Social assistance 4%
Wholesale Trade 3%
Construction 6%
Manufacturing 6%
Waste Mgmt & Remediation 0%
Information 2%
Finance and Insurance 3%
Natural resources & energy 1%
Professional & Business Services 12%
Nonprofit organizations 2%
State & local gov't 12%
All other 0%
Federal gov't 8%
% of jobs lost in sector
0% 25% 50% 75% 100%
Se
ve
re3
2%
Mo
de
rate
45
%
Min
or
23
%
Impact% VA jobs
Low High scenario Low High scenario
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SEVERELY IMPACTED INDUSTRIES REPRESENT TWO-THIRDS OF TOTAL FORECASTED EMPLOYMENT LOSSES
Estimated employment loss by industryRange of estimated job losses in thousands, area based on average of high & low scenarios
Source: Emsi 2020.1; VEC UI claims; information from Data Compilation workgroup of Virginia Economic Strike Force; interviews with Virginia businesses and stakeholders; review of national economic forecasts, research, and press; VEDP analysis
Severe Moderate Minor
30
Hospitality & entertainment
249 - 321
Retail trade
70-109
Repair, personal,
home svcs.
47 – 74
Employment,
admin support
svcs.
51 – 96
Trans. & ware-
housing
22 – 36
Prof & bus.
svcs.
36 – 57
Manufacturing
21 – 34
Fin. &
insur.
12 – 19
Healthcare
41 - 59
Construction
23 – 36
Real estate, rental
& leasing
18 – 25
Social ass.
15 - 29
Ed. Svcs
14 – 23
Whole-
sale
Trade
12 – 19
State & local gov.Non-
profits
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MANY OF THE HARDEST HIT SUB-SECTORS ARE IN LEISURE, HOSPITALITY, RETAIL, AND LOCAL SERVICES INDUSTRIES
31
1 Excludes some small sectors with negligible employment
Source: VEDP analysis
Top ten sub-sectors by expected job loss1,000s of jobs
Top ten sub-sectors by percentage job loss1
% change from baseline
Food services, drinking places
Admin & support svcs
Ambulatory health care svcs
Personal & laundry svcs
Prof, sci, and tech svcs
Amusement, gambling & rec.
Accommodation
Local government
Clothing & clothing accessories
Specialty trade contractors
Perf. arts, spec. sports & related
Miscellaneous store retailers
Motion Picture & Sound Recording
Oil & Gas Extraction
Food Services & Drinking Places
Furniture & Furnishings Stores
Electronics & Appliance Stores
Clothing & Clothing Acce. Stores
Amusement, Gambling, & Rec.
Rental % Leasing Services
236.7
96.4
48.3
42.3
40.5
34.5
32.9
26.6
24.1
23.9
100%
89%
83%
81%
77%
76%
76%
75%
75%
70%
Low High scenario Low High scenario
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POTENTIAL JOB LOSSES VARY BY REGION, LARGELY DUE TO DIFFERENCES IN INDUSTRY MIX (E.G., % OF JOBS IN HOSPITALITY)
Source: VEDP analysis 32
12.5 31.0
Low
14.4%
Statewide
High
22.7%
Estimated jobs lost/furloughed as % of baseline jobsRange of estimated job losses, shading based on average of high and low scenarios
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NOTABLE IMPACTS IN OTHER SUB-SECTORS
33
Sector Outlook
Aquaculture/seafood VA fishing industry has been hit hard and quickly as restaurant orders declined sharply;
demand from consumers through retail channels also fell partly because seafood may be
viewed as a luxury during hard economic times. Many businesses in this sector are small.
Automotive manufacturing Automotive industry was hit earlier and harder than most other manufacturing sectors in
Virginia. The industry is facing collapsing demand for vehicles. High profile layoffs /
suspension of operations include Volvo, Corning (New River Valley).
Tire manufacturing Industry hit by declining demand for automobiles and planes. Goodyear (Danville) and
Yokohama (Salem) both suspended production.
Newspapers Layoffs and furloughs experienced throughout the state due to drop in advertising
revenue, compounding already-existing challenges in the industry. Virginia-based Gannett
and Lee Enterprises both reported furloughs.
Movie production Production crews operating in Virginia and nationally have come to a complete halt,
resulting in numerous layoffs / furloughs.
Commercial banking Financial institutions are seeing surging activity due to the PPP and other programs.
However, staff in branches are facing layoffs and furloughs as foot traffic collapses.
Mining All major coal mines in SWVA shut down temporarily due to health crisis. Coal exports are
already suffering and will likely continue because of strong dollar and declining global
demand.
Nonprofits Nonprofits are struggling to adapt during this time, some experiencing downturn in
donations and others having difficulty implementing programs.
Governments Federal government is not expected to be significantly impacted from an employment
perspective. Due to impact on state & local budgets, however, dozens of localities in
Virginia have instituted temporary furloughs for some non-essential staff.
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NET JOB CREATION (OR ONLY MODEST LOSSES) IS EXPECTED IN A HANDFUL OF INDUSTRIES
34
Sector Outlook
Light trucking, couriers, &
warehousing
The surge on online retail activity is creating significant new demand for last-mile logistics.
Amazon alone has hired over 3,000 new employees in its warehouses in Virginia. VEDP
estimates 10% employment increase in these sectors.
Food and beverage and
general merchandise
stores
Grocery stores, as well as general merchandise stores like Walmart are struggling to keep
up with increasing demand. There have been multiple reports of companies in these
industries hiring in Virginia.
Building material and
garden equipment retail
Home improvement expenses have surged under the quarantine and chains like Home
Depot and Lowes have reported significant hiring in Virginia and across the country.
Online retailers Online retail sales have surged since the beginning of the COVID-19 crisis, significantly
boosting revenue of online retailers. Some job creation is expected in this industry,
although most will be in area of logistics (see above).
Data centers Virginia’s large data center industry stands to benefit from increased online traffic and use
of streaming services in particular. Given the industry is not labor intensive, this will not
equate to significant employment gains, but on-going capital investment likely to continue
unabated.
Quick-service restaurants
(QSRs, i.e., fast food)
While employment is expected to be lost in the fast food industry, industry stakeholder
reports many companies are operating at around 80%, a stark contrast with the full-
service restaurant industry, which has borne the brunt of the impact.
Food, textile, cleaning, and
personal hygiene product
manufacturing
Net job loss is expected across virtually all manufacturing industries, but certain segments
are seeing a surge in demand and offsetting losses. These notably include food
processing, specialty textiles (PPE), cleaning produces, and personal hygiene products
among others. There are reports of manufacturers diversifying into these product
categories.
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VARIOUS ORGS FORECASTING JOB LOSSES ARE USING DIFFERENT MEASURES AND METHODS; VEDP RESULTS LARGELY COMPARABLE
Source: Moody’s Analytics; McKinsey & Company; Weldon Cooper Center at the University of Virginia 35
Important note on VEDP preliminary estimates
▪ VEDP preliminary estimates of 660K to 1M correspond to job loss due to direct, indirect, and induced impacts from COVID-19 pandemic. VEDP does not have forecast of the pace or extent of employment recovery over 2020 Q3 & Q4, so cannot estimate net impact for 2020 – e.g. end-of-year balance of job reductions and additions.
▪ VEDP estimates include payroll jobs covering all sectors, including agriculture, as well as sole proprietors (e.g. self-employed). Most other forecasters present job loss numbers using non-farm payroll, which provide poor or no coverage of the latter categories and may underrepresent full extent of job loss.
Comparison with other forecasts
▪ Moody’s May Virginia forecast projects approximately 474K payroll non-farm jobs lost peak to trough (January 31 and May 31), with employment still down 280K jobs on net December 31.
▪ McKinsey & Company analyzed employment by occupation and determined that a total of 1.3M Virginia jobs were ‘vulnerable’ to layoff, hour, or wage reduction.
▪ Dynamic modelling conducted by UVA’s Weldon Cooper Center projects payroll non-farm job losses ranging from 300K to 500K on net in 2020, based on scenarios ranging from 2% to 6% GDP contraction, respectively. However, Weldon Cooper has not estimated max job losses at peak.
Appendix
36
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DATA SHARED BY DATA WORKGROUP MEMBERS AND STATUS
37
Agency
Industry/area Data and information provided
In forecast
DHCD
Small
businesses
Provided:
■ National and Virginia-specific results from survey of small businesses (National Main Street Association)
■ Qualitative information from check-in calls with small businesses
Available later:
■ Follow up survey of national and Virginia small businesses (National Main Street Association) – end of
April
DOF
Wood Products
Provided:
■ Qualitative outlook on sector, related press coverage
■ Online resources on forest-related industry impact
Available later:
■ DOF survey of forest-related – by April 17
Marine
Products
Board/VDACS
Seafood - Food
& Beverage
Provided:
■ Stats on commercial and recreational fisheries and aquaculture jobs, demand, revenue loss in VA
■ Qualitative information about steps taken by industry, impact, concerns, and outlook for commercial and
recreational fisheries
■ Number of recreational fisheries jobs in VA: 5,893
SBFA (SBSD)
Financial
services / small
businesses
Provided:
■ Results from survey of Virginia small businesses on impacts of COVID-19
■ Data on VA SBFA loans applications for payment deferrals and term extensions; trends in COVID loan
requests; and economic impact of concessions
■ Information about banks seeking economic relief for loans guaranteed by SBFA
Available later:
■ Updated stats on VA SBFA loans trends and performance
SCHEV
Higher ed
Provided:
■ Enrollment by institution
Available:
■ Institution-level data on admissions, enrollment, retention and graduation, tuition and fees, student debt
■ VLDS
✓
✓
✓
✓
✓
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DATA SHARED BY DATA WORKGROUP MEMBERS AND STATUS (CONTINUED)
38
Agency
Industry/area Data and information provided
In forecast
Secretary of
Education,
Workforce
Advisor
Workers
Provided:
■ Access to COVID-19 dashboard that illustrates jobs impacted, UI claims, and socio-economic
characteristics of impacted workers
Available later:
■ Automation risk scores to assess which jobs may not come back after crisis
TAX
Overall
economy
Data provided:
■ IHS Markit national economic forecast
In progress:
■ Virginia’s economic forecast (certain component)
Available at later date:
■ Quarterly notebook
■ Income tax withholdings (late April)
■ Sales and use tax collections by source (May)
VCCS
Higher Ed
Provided data:
■ Registrations for unemployment services
■ Profile of individuals registering for unemployment services and trends (demographic, occupational,
etc.)
In progress:
■ Drill-down into unemployment services registrations
■ Community college enrollment in credit and non-credit courses
VDOT
Transportation
In progress:
■ Current traffic volume
■ Motor vehicle sales
■ Transit ridership
■ Passenger volumes at air carrier airports
✓
✓
✓
✓
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DATA SHARED BY DATA WORKGROUP MEMBERS AND STATUS (CONTINUED)
39
Agency
Industry/area Data and information provided In forecastVEC
Workers
Provided
■ Weekly UI claims by locality and industry
■ Demographics profile of claimants
In progress:
■ Weekly UI claims by occupation, by employer NAICS
VHDA
Mortgage –
Financial services
Provided:
■ Trends in loans forbearance requests
■ Volume of loans in forbearance
■ Servicer call center volume
■ Trends in new home purchase loan requests
■ Trends in rental housing market
■ Results from survey of VA realtors on home buyer and seller interest and behavior
VTC
Tourism
Provided:
■ Findings from Virginia-specific study of economic impact
■ Findings from national study of economic impact due to travel losses
■ National and Virginia trends in weekly travel spending
■ Results from VTC industry survey on traveler sentiment in VA
■ Summary of results from other industry national surveys on traveler sentiment
■ Hotel closures
■ Weekly trends in hotel occupancy and rates in US, VA, and major VA metros
Available later:
■ Study of economic impact in Virginia’s 10 tourism regions
■ VA tax revenue impact
■ Jobs and wages impacted or lost
✓
✓
✓
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133,373
76,713169,97
666,378
56,625110,99
881,727
61,135
64,561134,52
860,458
58,760
17,988
77,423
27,337
5,214
69,430166,88
423,490
PPP FUNDING USED BY A WIDE RANGE OF INDUSTRIES, NOT JUST THOSE MOST SEVERELY IMPACTED (NATIONWIDE)1
1 Excludes amounts for unclassified and unknown industries (234K loans amounting to $11.6B)
Source: U.S. Small Business Administration, loan approvals through June 20, 2020; Bureau of Economic Analysis; Bureau of Labor Statistics; VEDP analysis
Loan amounts approvedby industry ($M)
40
Loan approvals per M$ in industry GDP ($)
Loan approvals per M$ in industry payroll ($)
Se
ve
reM
od
era
teM
inor
41,498
39,908
30,514
26,167
16,605
15,329
7,801
4,473
66,583
63,922
53,621
27,515
12,034
11,829
9,135
1,570
65,621
7,726
1,459
Acc & Food Services
Retail Trade
Other Services
Admin Support & Waste Mgmt
Transp & Warehousing
Real Estate & Rental
Arts, Ent, & Rec
Mining, Quarrying, & O&G
Health Care & Social Ass
Construction
Manufacturing
Wholesale Trade
Finance & Insurance
Educational Services
Information
Management of Companies
Prof, Scientific, & Tech Svcs
Ag, Forestry, Fishing & Hunting
Utilities
69,005
35,446
78,921
40,663
24,572
19,881
35,147
12,392
42,602
73,740
22,524
22,302
6,895
44,754
8,232
3,901
41,242
44,796
4,352
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WITH $514B IN PPP LOANS DISBURSED AS OF JUNE 20, VIRGINIA HAS FARED RELATIVELY WELL AMONG OTHER LARGE STATE ECONOMIES1
1 Cumulative totals for PPP round 1 & round 2 through June 20, 2020
Source: U.S. Small Business Administration, loan approvals through June 20, 2020; VEDP analysis 41
Loan totals approvedfor selected states ($M)
Loan approvals per M$ in state private sector GDP ($)
Loan approvals per M$ in state private sector payroll ($)
67,152
40,535
37,764
31,243
20,555
15,812
14,199
14,163
12,481
12,293
12,152
9,901
8,817
California
Texas
New York
Florida
Pennsylvania
Michigan
Massachusetts
Georgia
Virginia
North Carolina
Washington
Maryland
Tennessee
24,095
23,945
24,357
32,029
27,940
32,659
26,379
25,998
27,518
24,033
23,177
28,937
26,063
63,441
63,290
61,917
79,350
69,233
76,814
58,921
66,485
65,409
62,452
61,698
74,923
65,487
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DEGREE OF IMPACT ON VIRGINIA WORKERS LIKELY TO VARY SIGNIFICANTLY DEPENDING UPON SOCIO-ECONOMICS
Source: American Community Survey, public use microdata, 2018; VEDP analysis 42
Lower-wage workers disproportionately representedin severe-impact sectors % of workers by income group
0% 50% 100%Severeimpact
Moderateimpact
Minorimpact
Less than $30,000 More than $30,000
Severe
impact
Moderate
im
% of all workers < $30K
Minority workers slightly more heavily represented in severe-impact sectors% of workers by ethnic group
0% 50% 100%
Severe
Moderate
Minor
All Workers
White African-American Asian Other
Severe impact
Mod. impact
Minor impact
All sectors
Sectors
experiencing
Genders equally represented in severe-impact sectors % of workers by gender
0% 50% 100%
Severe
Moderate
Minor
Female Male
Severe
impact
Moderate
impact
Minor
impact
Females as % of all workers
Workers without college degrees disproportionately represented in severe-impact sectors% of workers by educational attainment
0% 50% 100%
Severe
Moderate
Minor
Less than Bachelor's Bachelor's and above
Severe
impact
Moderate
impact
Minor
impact
Sectors
experiencing
% of all workers
< Bachelor’s
Sectors
experiencing
Severe impact
Mod. impact
Minor impact
Severe impact
Mod. impact
Minor impact
Severe impact
Mod. impact
Minor impact
Sectors
experiencing
43NO
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SMALL EMPLOYERS REPRESENT VAST MAJORITY OF FIRMS & HALF OF EMPLOYMENT, HIGHLY CONCENTRATED IN CERTAIN SECTORS
52.8%
5.5%
14.6%
9.2%
17.9%
500+ employees
250 - 499 employees
50 - 249 employees
20 - 49 employees
0 - 19 employees
0% 50% 100%
Ag., forestry, fishing
Construction
Other services
Arts, ent., & rec
Educational services
Real estate & leasing
Mining, quarrying, O&G
Acc. & food services
Prof., scientific, & tech svcs.
Health care & social ass.
Wholesale trade
Admin support & waste mgmt
Manufacturing
Retail trade
Trans & warehousing
Information
Finance and insurance
Mgmt of companies
Utilities
Less than 500 workers More than 500 workers
Source: Census; LEHD; Quarterly Workforce Indicators; Census Bureau, Business Dynamics Survey; VEDP analysis
Employment by firm sizeVirginia, 2017
Employment by firm size, by industryVirginia, 2017
43
47% of
employment
0.4%
0.4%
3.7%
7.7%
87.8%
500+ employees
250 - 499 employees
50 - 249 employees
20 - 49 employees
0 - 19 employees
Firm count by firm sizeUnited States, 2016
Overall for businesses
with less than 500
Admin Support & Waste Mgmt
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SMALL BUSINESSES (< 500 JOBS) DISPROPORTIONATELY FOUND IN SEVERELY- AND MODERATELY-IMPACTED SECTORS
55%
64%
39%
45%
36%
61%
0% 50% 100%
Severe impact
Moderate impact
Minor impact
Less than 500 jobs 500 or more jobs
Source: Emsi 2020.1; Census Bureau LEHD; VEDP analysis
Jobs in small vs. large firms in sectors withsevere, moderate, or minor impact from COVID-19% of jobs, 2019
44
Overall for businesses
with less than 500 jobs
Sectors
experiencing
45NO
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FINDINGS FROM THE GREAT RECESSION: SMALL BUSINESS SECTOR MORE NEGATIVELY IMPACTED, SLOWER TO RECOVER
86.0
88.0
90.0
92.0
94.0
96.0
98.0
100.0
102.0
104.0
2008 2009 2010 2011 2012 2013 2014
88.0
90.0
92.0
94.0
96.0
98.0
100.0
102.0
104.0
2008 2009 2010 2011 2012 2013 2014
Source: U.S. Census Bureau, Business Dynamics Statistics; VEDP analysis
Employment change by firm sizePayroll workers on 3-12 each year, 2008 - 2014, indexed
Firm count change by firm size2008 - 2014, indexed
45
Micro-business (<5) 5 – 499 employees 500+ employees
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FINDINGS FROM THE GREAT RECESSION: SMALL BUSINESSES ACCOUNTED FOR 1/2 OF U.S. JOBS, BUT ~70% OF NET JOB LOSSES
12,802
9,325
10,777
15,435
12,427
10,887
6,807
6,687
3,142
2,694
6,203
10,098
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 499
500 - 999
1,000 - 2,499
2,500 - 4,999
5,000 - 9,999
10,000+
Source: U.S. Census Bureau, Business Dynamics Statistics; VEDP analysis
Job loss by firm sizeNet jobs loss by firm size, total net job loss = 107,284 , 2009
46
73% of net
job loss in
2009
0 - 499 employees 500+ employees
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FINDINGS FROM THE GREAT RECESSION: VIRTUALLY ALL BUSINESS CLOSURES IN 2009 WERE FIRMS WITH FEWER THAN 500 EMPLOYEES
10,637
882
371
153
35
20
6
4
2
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 499
500 - 999
1,000 - 2,499
2,500 - 4,999
5,000 - 9,999
10,000+
Source: U.S. Census Bureau, Business Dynamics Statistics; VEDP analysis
Business closures by sizeNumber of firms, total firm deaths = 12,110, 2009
47
99.99% of
firms closed
in 2009
0 - 499 employees 500+ employees
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ECONOMIC ACTIVITY ACROSS LARGE SWATHS OF THE ECONOMY HAS HALTED; CONSUMER CONFIDENCE HAS PLUMMETED
Source: OpenTable; Transportation Safety Administration; Box Office Mojo; University of Michigan; VEDP analysis 48
OpenTable reservations Online reservations
Passengers passing through TSA checkpoints1,000s of passengers
Weekly box office resultsTop 10 gross, M$
0
50
100
150
200
250
0
50
100
150
200
250
0
500
1,000
1,500
2,000
2,500
3,000
40
60
80
100
120
Univ. of Michigan Consumer Confidence Index100 = 1996
Virginia
Feb 20 Mar 20 Apr 20Jan 20 May 20
Feb 20 Mar 20 Apr 20Jan 20 May 20 Feb 20 Mar 20 Apr 20Jan 20 May 20
Feb 20 Mar 20 Apr 20Jan 20 May 20
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THREE PHASES OF ECONOMIC IMPACT AND RECOVERY
49
3,500,000
3,750,000
4,000,000
4,250,000
4,500,000
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Epidemiological
apex
Containment
measures drive
spike in job loss
Impacts up supply chain
and diminished consumer
spend start to generate
indirect / induced impact
Progressive re-opening of
economy: net positive job
creation, but company
fatalities & lingering impact
Residual indirect, induced
impact slowly work their
through the economy;
slow ramp up to initial job
levels
N N+1 N+4 N+7
Economic
apex
Initial
recoveryLong-term
recovery
▪ Estimates of short-term direct impact based on
stakeholder input and monitoring economic news
& indicators
▪ First-take analysis of indirect / induced impact
using IMPLAN
▪ Analysis of impacted industries’ demographics
▪ Monitoring / analysis of fiscal / monetary measures
and impacts / gaps
▪ Refine understanding and update ‘damage report’
▪ Work with Weldon Cooper on dynamic modeling
▪ VEDP monitoring of economic indicators and
maintaining dialogue with stakeholders
▪ Continued monitoring of policy measures, impacts,
gaps
1 2 34.50M
4.25M
4.00M
3.75M
3.50M
Months
Source: VEDP analysis
50NO
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PRELIMINARY, PREDECISIONAL, DRAFT PERSPECTIVE OF MCKINSEY ON STATE/LOCAL STRATEGIES FOR REOPENING
Source: McKinsey & Company, “Winning the (local) COVID-19 war” 50
Winning the (local) Winning
the (local) COVID-19 war
COVID-19 warWinning the (local) Winning the (local) COVID-19 war
COVID-19 war
51NO
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EXCERPT FROM MCKINSEY U.S. CONSUMER SENTIMENT SURVEY CONDUCTED 4/6-4/12 (NATIONAL PERSPECTIVE)
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