Economic Outlook

Mid-Atlantic CFO RoundtableMay 18, 2016

R. Andrew Bauer, Ph.D.Senior Regional EconomistResearch Department

Economic Outlook

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R. Andrew Bauer, Ph.D.Senior Regional EconomistMay 18, 2016

The views expressed here are those of the author, and do not necessarily represent those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Percent change from previous quarter at annual rate

Note: Projection is the median, central tendency, and range from the March 2016 Summary of Economic Projections. Red dots indicate median projections. Projections of change in real gross domestic product (GDP) are from the fourth quarter of the previous year to the fourth quarter of the year indicated. 3

Q10.5%

Real Gross Domestic Product

Source: Bureau of Economic Analysis via Haver Analytics & Federal Reserve Board

FOMC Projection

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Decomposition of Real GDP

Source: Bureau of Economic Analysis and Bureau of Labor Statistics via Haver Analytics

Note: Productivity is calculated as real GDP per employee, from the Household Survey.

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1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Employment

Productivity

GDP

10-Year Annual Growth Rates

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Real Gross Domestic Product

Source: Bureau of Economic Analysis via Haver Analytics

2016 Q1 Q2 Q3 Q4 Q1

CHANGE FROM PREVIOUS QUARTER AT COMPOUND ANNUAL RATE [Percent]:

Gross Domestic Product 0.6 3.9 2.0 1.4 0.5

Personal Consumption Expenditures 1.8 3.6 3.0 2.4 1.9

Nonresidential Fixed Investment 1.6 4.1 2.6 -2.1 -5.9Structures -7.4 6.2 -7.2 -5.1 -10.7Equipment & Software 2.3 0.3 9.9 -2.1 -8.6

Residential Fixed Investment 10.1 9.3 8.2 10.1 14.8

Exports of Goods & Services -6.0 5.1 0.7 -2.0 -2.6Imports of Goods & Services 7.1 3.0 2.3 -0.7 0.2

Final Sales to Domestic Purchasers 1.7 3.7 2.9 1.7 1.2

LEVEL IN QUARTER AT SEASONALLY ADJUSTED ANNUAL RATE [Billions of Chained (2005) Dollars]:

Change in Private Inventories 112.8 113.5 85.5 78.3 60.9

Net Exports of Goods & Services -541.2 -534.6 -546.1 -551.9 -566.6

2015

1.2Government Consumption Expenditures & Gross Investment

-0.1 2.6 1.8 0.1

Source: Bureau of Labor Statistics/Haver Analytics

Payroll Employment Growth– Through March 2016

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1

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

YoY% Change

Washington DC, Metro Div.MarylandVirginiaPennsylvania

Source: Bureau of Labor Statistics/Haver Analytics

Unemployment Rate – Through March 2016

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3

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6

7

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9

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

YoY% Change

Washington DC, Metro Div.MarylandVirginiaPennsylvania

Maryland unemployment rates by county

8Source: Bureau of Labor Statistics

3.43.5

3.9

12.4

7.2 7.37.1

8.2

7.6

Source: Bureau of Labor Statistics

Maryland Business by Sector

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36,561

34,610

17,074

19,328

19,794

15,827

13,448

4,108

3,306

2,809

698

40,312

32,815

19,541

19,325

16,025

14,774

14,380

3,641

3,495

2,555

695

Professional & Business Services

Trade, Transportation & Utilities

Education & Health Services

Other Services

Construction

Financial Activities

Leisure & Hospitality

Manufacturing

Total Government

Information

Natural Resources

Number of Establishments by Industry - Maryland

Qtr4 2007

Qtr3 2015

Source: Bureau of Labor Statistics

Maryland Business Dynamics

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3,393

19

1,380

185

1,148

117

535

97

-591

-13

257

-119

2,336

16

-2,389

-282

-647

-137

-518

3,848

1,876

919

254

70

Total

Natural Resources

Construction

Manufacturing

Trade, Transportation & Utilities

Information

Financial Activities

Professional & Business Services

Education & Health Services

Leisure & Hospitality

Other Services

Total Government

Establishment Loss inRecession (Q4:2007 toQ2:2009)

Establishment Gain inRecovery (Q2:2009 toQ3:2015)

Source: Bureau of Labor Statistics

Baltimore MSA Business Dynamics

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1,755

16

688

153

555

20

245

101

-310

43

167

-74

353

-3

-1,114

-201

-399

-123

-281

1,022

687

411

355

8

Total

Natural Resources

Construction

Manufacturing

Trade, Transportation & Utilities

Information

Financial Activities

Professional & Business Services

Education & Health Services

Leisure & Hospitality

Other Services

Total Government

Establishment Loss inRecession (Q4:2007 toQ2:2009)Establishment Gain inRecovery (Q2:2009 toQ3:2015)

Source: Core Logic/Haver Analytics

Housing Market – Through March 2016

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

YoY% Change United StatesMarylandBaltimore MSA

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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March0.8%

FOMC Projection

Personal Consumption Expenditure Price Index12 Month % Change

Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics

2% Longer-run Target

Notes: FOMC projection is the median, range, and central tendency for Q4/Q4 percent changes, from the March 2016 meeting. Red dots indicate median projections.

The views expressed here are those of the author, and do not necessarily represent those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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