growth and prosperity: the roanoke region, virginia… · growth and prosperity: the roanoke...

Growth and Prosperity: The

Roanoke Region, Virginia, and

Beyond

Terry Rephann

Roanoke Regional Chamber of Commerce Meeting

Roanoke, Virginia

June 2, 2011

Presentation Outline

A Brief Overview of the National/International Economy

State and Regional Economic Resiliency in the Current

Business Cycle

Housing

Retail Trade

Employment

Income

Long-term Regional Economic Trends

The Income and Demographic Nexus

The Good News

A Brief History of the 2006-2011 Business

Cycle Monetary tightening

Energy price spike I

Fiscal stimulus I

Housing bubble burst and steep housing price decline

Financial crisis

TARP and quantitative easing I

Fiscal stimulus II (the Big One)

Quantitative easing II (QE2)

Currency depreciation and emerging market growth

Fiscal stimulus III

Japanese earthquake and disrupted supply chains

Middle East volatility and energy spike 2

Eurozone crisis

Debt ceiling concerns and fiscal de-stimulus (reductions in short-term government spending)

Double dip in housing prices

New asset bubbles (e.g., social networking stock bubble, farmland, natural resources)

Slowing growth in some emerging markets

Removal of quantitative easing

Ending of fiscal stimulus

Reluctant consumers (who are still deleveraging) and reluctant businesses (with cash stockpiles)

Economist Forecasts and Reality

-8

-6

-4

-2

0

2

4

6

8

% G

DP

Ch

an

ge

Actual GDP

Source: Bureau of Economic Analysis

Economist Forecasts and Reality

-8

-6

-4

-2

0

2

4

6

8

% G

DP

Ch

an

ge

Actual GDP

9 months

Source: Bureau of Economic Analysis and Wall Street Journal Survey of Economists

Economist Forecasts and Reality: Take 2

-8

-6

-4

-2

0

2

4

6

8

% G

DP

Ch

an

ge

Actual GDP

9 months

6 months



-8

-6

-4

-2

0

2

4

6

8

% G

DP

Ch

an

ge

Actual GDP

9 months

6 months

3 months



-8

-6

-4

-2

0

2

4

6

8

% G

DP

Ch

an

ge

Actual GDP

9 months

6 months

3 months

<1 month


Annual GDP Growth

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

2002 2003 2004 2005 2006 2007 2008 2009

% G

DP

Ch

an

ge

Roanoke MSA

Virginia

United States

. . . but output fall was deeper.


Roanoke MSA slower to enter recession . . .

Roanoke MSA Employment Growth, 1969-2009


Roanoke MSA employment shrinkage worse than U.S., VA % change

-6

-4

-2

0

2

4

6

8

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

United States

Virginia

Roanoke MSA

The Short Term

Housing Permits, 6 Month Moving

Average % of 2000 Census housing units

. . . .

Source: U.S. Census Bureau

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

Jun-2

004

Jun-2

005

Jun-2

006

Jun-2

007

Jun-2

008

Jun-2

009

Jun-2

010

United States

Virginia

Roanoke MSA

Housing construction less active

Housing Price Changes

Source: Federal Housing Finance Agency

% change

-10

-5

0

5

10

15

United States

Virginia

Roanoke MSA

Housing prices continue to decline

Retail Sales: Local Option Sales Tax

-15

-10

-5

0

5

10

15

Jun-0

0

Jun-0

1

Jun-0

2

Jun-0

3

Jun-0

4

Jun-0

5

Jun-0

6

Jun-0

7

Jun-0

8

Jun-0

9

Jun-1

0

% 1

2 m

on

th c

han

ge

Virginia

Roanoke

Source: Virginia Department of Taxation

Retail sales rebound.

Employment Growth

Source: Bureau of Labor Statistics, Current Employment Statistics (last point April 2011)

% Roanoke employment rebound has not materialized quite yet.

-5

-4

-3

-2

-1

0

1

2

3

4

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

United States

Virginia

Roanoke MSA

Unemployment Rate Graph

Source: Bureau of Labor Statistics (last point in April 2011)

% Roanoke MSA unemployment rate spread with Virginia has grown in recovery.

0

2

4

6

8

10

12

19901992199419961998200020022004200620082010

United States

Virginia

Roanoke MSA

Initial Unemployment Claims, 6 Month

Moving Average

0

500

1,000

1,500

2,000

2,500

Aug-07 Aug-08 Aug-09 Aug-10

Initial claims remain high

Source: Virginia Employment Commission

Unemployment Rate, December 2007

Source: Bureau of Labor Statistics

Unemployment, December 2007-March

2011

Unemployment Rate, March 2011

Source: Bureau of Labor Statistics

The Long Term

The Recent View: Roanoke MSA Per Capita

Income as Percentage of U.S

84

86

88

90

92

94

96

98

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009


Roanoke per capita income is converging on U.S. average

Population Growth, 1970-2009

-1

-0.5

0

0.5

1

1.5

2

2.5

3

3.5

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

% C

han

ge

United States

Virginia

Roanoke MSA


Slower growing population

Transfer Payments as Percentage of

Total Personal Income

0

5

10

15

20

25

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

% o

f To

tal

United States

Virginia

Roanoke MSA


Greater increase in transfer payments

Government Transfer Receipts Per

Capita by Category

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

$ p

er

cap

ita

Other transfers

Education

Veterans

Unemployment insurance

compensation

Income maintenance

Medical

Retirement and disability


Growth in medical payments is accelerating

Roanoke MSA, Aging, 2000 and 2010

0

1

2

3

4

5

6

7

8

9<

5

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

% o

f to

tal p

op

ula

tio

n

2000

2010


Fewer younger adults . . . more middle aged.

Aging, Roanoke MSA versus Virginia, 2010

0

1

2

3

4

5

6

7

8

9<

5

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

% o

f to

tal p

op

ula

tio

n

Roanoke MSA

Virginia


Fewer younger adults . . . more middle aged and seniors.

Virginia, Percentage 65 Years and Older

0

2

4

6

8

10

12

14

16

18

20

1980 1990 2000 2008 2010 2020 2030

The Baby Boomers are approaching the hill.

Roanoke MSA is already here (16.3%).


1980


1990


2000


2008


2010


2020


2030


Income Patterns

Source: Bureau of Labor Statistics,

Consumer Expenditure Survey,

2008

Household Income varies

over the life cycle

Composition changes

from earnings to pension,

social security, and

dividends, interest, and

rent income

The latter categories are

more stable than the

former $0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

Consumption Patterns per Household

Member ($)

Item <25 25-34 35-44 45-54 55-64 65-74 75+

Food 2,224 2,225 2,378 2,850 3,027 2,966 2,623

Maintena

nce

92 237 272 547 709 908 1,086

Utilities 938 1,126 1,252 1,573 1,892 1,966 2,045

Apparel 676 702 677 825 772 767 503

Transpor

tation

2,732 3,107 2,969 3,970 4,465 3,744 2,928

Healthca

re

341 620 757 1,085 1,821 2,655 2,942

Entertain

ment

804 988 1,092 1,221 1,446 1,343 899

Source: Bureau of Labor Statistics, Consumer Expenditure Survey, 2008

Annual Public Health Expenditures Age Group Medicare Medicaid Other Public Total Public

0-18 $2 $819 $271 $1,092

19-44 $87 $662 $351 $1,100

45-54 $310 $737 $403 $1,451

55-64 $706 $1,026 $683 $2,415

65-74 $5,242 $1,112 $573 $6,927

75-84 $8,675 $2,058 $590 $11,323

85+ $10,993 $5,424 $590 $17,387

Source: Center for Medicare and Medicaid Services

Consumption Patterns

Seniors consume a different bundle of goods and services

Seniors consume more health care, more housing operations and maintenance, and less of almost everything else

Seniors attract a large amount of health expenditures when Medicare kicks in.

Roanoke MSA’s Largest Sectors

0

5,000

10,000

15,000

20,000

25,000

30,000

Em

plo

ym

en

t

Retail Trade

Health Care and Social

Assistance


The Good News

The Long View: Roanoke MSA Per Capita

Income as Percentage of U.S.

50

55

60

65

70

75

80

85

90

95

100

1929

1932

1935

1938

1941

1944

1947

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

96.7%


68.3%

You’ve come a long way.

Per Capita Income, 2009

$38,322

$44,057

$39,635

$35,000

$36,000

$37,000

$38,000

$39,000

$40,000

$41,000

$42,000

$43,000

$44,000

$45,000

Roanoke MSA Virginia United States


Roanoke MSA lags by a conventional measure.

Per Capita Income Adjusted by Regional

Price Parities, 2009

$43,449 $43,406

$39,635

$37,000

$38,000

$39,000

$40,000

$41,000

$42,000

$43,000

$44,000

Roanoke MSA Virginia United States


But if you fix it, Roanoke MSA is better than the U.S. . . . And Virginia too.

Regional Report Card Score Requirements of an index:

Understandable

Policy relevant

Anticipatory and pro-active

Readily available

Outcome and asset orientation

Valid and important

Representative O’Hara and Vazquez. 2007. The

Five Pillars of Economic Development: A Study of Best Practices for the Roanoke Valley

Based on Isserman, Feser, and Warren. 2009. Why some rural places prosper and others do not. International Regional Science Review 32, 3: 300-342.

The Fantastic Four Four Indicators

Poverty Rate

Unemployment Rate

Dropout rate (# of 16-19 year olds who are not enrolled in school and not high school graduates)

Housing problems rate. Percentage of households having one or more of following: (1) lacking complete plumbing facilities, (2) lacking complete kitchen facilities, (3) having more than 1 occupants per room, and (4) monthly owner costs 30% or more of household income.

To qualify as a prosperous place, you must do better than the nation on all four criteria

U.S. Prosperity, 2000

U.S. Prosperity, 2005-2009

Virginia Prosperity, 2000

Virginia Prosperity, 2005-2009

Roanoke MSA ranks 26th (out of 366) metro areas in the nation.

Why?

It’s not: . . . rapid growth

. . . location and accessibility

. . . industrial clusters

. . . amenities or cultural diversity

It is: . . . a more stable population

. . . a robust private sector

. . . a more educated population

. . . industrial diversity

. . . strong social fabric (civic and religious engagement)

It’s hip to be square

Finale

Roanoke MSA lags on some indicators exiting the recession (it also lagged on entering the recession)

The Roanoke MSA’s long-term development is being inexorably shaped by demographics in many ways

The Roanoke MSA has come far and ranks very favorably vis-á-vis the state and far ahead of the nation on key development indicators

growth and prosperity: the roanoke region, virginia… · growth and prosperity: the roanoke...

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