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

Oct = 7.3

%

GI FCST13 – 7.514 – 7.115 – 6.516 – 6.017 – 5.718 – 5.4

2007 3

2008 3

2009 3

2010 3

2011 3

2012 3

2013 3

2014 3

2015 3

-10

-8

-6

-4

-2

0

2

4

6

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

Lower Wage

Mid-Wage

Higher-Wage

(60,000) (40,000) (20,000) 0 20,000 40,000 60,000 80,000

2008-2009 2010-2013

Sources: EMSI Total Employment, 2013.3 & GMU Center for Regional Analysis

15 Largest Job MarketsJob Change: Aug 2012 – Aug 2013

New York

Los Angeles

Chicago

Dallas

DC Houston

Philadelphia

Boston

Atlanta

Miam

i

SF-Oakland

Detroit

Minneapolis

Seattle

Phoenix

020406080

100120140160180200

(000s)

Washington +33,400

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Job Change by SectorAug 2012 – Aug 2013

Washington MSA

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

State & Local Govt

Educ & Health Svcs

Federal Govt.

Prof. & Bus. Svcs

-20 -15 -10 -5 0 5 10 15 20 25 30

-2

0

-1

-2

8

2

-2

12

6

9

9

-7

1(000s) Total = 33,400

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Job Change by SectorJul 2013 – Aug 2013

Washington MSA

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

State & Local Govt

Educ & Health Svcs

Federal Govt.

Prof. & Bus. Svcs

-20 -15 -10 -5 0 5 10 15 20 25 30

-1

0

-1

-1

0

0

0

-2

-1

-13

-1

-2

-5(000s) Total = -26,500

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Annual Job ChangeDistrict of Columbia, 2002-2013

2002

2005

2008

-40

-30

-20

-10

0

10

20

30

40

50

60

(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

Job Change by SectorJul 2013 – Aug 2013 District of Columbia

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

State & Local Govt

Educ & Health Svcs

Federal Govt.

Prof. & Bus. Svcs

-20 -15 -10 -5 0 5 10 15 20 25 30

0

0

0

0

0

0

0

0

0

-10

-1

0

-2(000s) Total -13,800

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Annual Job ChangeSuburban Maryland, 2002-2013

2002

2005

2008

-40

-30-20

-100

1020

3040

5060

(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

Job Change by SectorJul 2013 – Aug 2013Suburban Maryland

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

State & Local Govt

Educ & Health Svcs

Federal Govt.

Prof. & Bus. Svcs

-20 -15 -10 -5 0 5 10 15 20 25 30

0

0

0

0

0

0

0

-1

0

0

0

0

0(000s) Total -1,800

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Annual Job ChangeNorthern Virginia, 2002-2013

2002

2005

2008

-40

-30

-20

-10

0

10

20

30

40

50

60

(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

Job Change by SectorJul 2013 – Aug 2013

Northern Virginia

Transp. & Util.Wlse Trade

ManufacturingInformation

FinancialOther Services

ConstructionLeisure & Hosp.

Retail TradeState & Local Govt

Educ & Health SvcsFederal Govt.

Prof. & Bus. Svcs

-20 -15 -10 -5 0 5 10 15 20 25 30

0

0

0

0

0

0

0

-1

0

-2

0

0

-3

(000s) Total -5,800

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Aug-06

Aug-07

Aug-08

Aug-09

Aug-10

Aug-11

Aug-12

Aug-13

0

2

4

6

8

10

12

8.5 – DC

7.3 – U.S.

5.9 – SMD

5.4 – MSA

4.4 - NVA

Unemployment Rates in the WMSABy Sub-State Area, 2006-2013

Source: Bureau of Labor Statistics (Region - Not Seasonally Adjusted, US – Seasonally Adjusted)

Job Growth in the Washington Metropolitan Area:

2012 - 2017

Washington Metropolitan Area

Gross Regional Product, 2012-2022 (in billions of 2005$s)

Region 2012 Share 2022 Share % Change

Metro $386.3 100.0 $513.5 100.0 32.9

District 92.1 23.8 114.5 22.2 23.7

SubMD 110.6 28.6 145.9 28.4 32.0

NoVA 182.5 47.2 251.1 48.9 37.6

__________________________________________ Source: IHS Global Insight, GMU Center for Regional Analysis

The Washington metropolitan area includes Jefferson County, WV and is included in the total GRP values.

Washington Metropolitan Area andSuburban Maryland, Change in Jobs,

Summary: 2012-20172012 – 2017 Year Total Jobs Net New

(% Change)Replacement(% Change)

Openings(% Change)

2012 3,927,775

2012 – 2017 4,291,969364,194 477,530 841,724

9.3% 12.2% 21.4%

Sub-MD2012 – 2017

1,293,9741,377,577

83,583 163,507 247,090

6.5% 12.6% 19.1%

Sources: EMSI Total Employment - 2013.2, GMU Center for Regional Analysis

Suburban Maryland Change in All Jobs, 2012 – 2017

Occupation 2-Digit SOC Net New Replacements

Business & Financial 11,999 9,668

Healthcare (All) 11,980 8,974

Personal Care & Service 8,730 7,479

Sales & Related 7,361 25,665

Building & Grounds Maint. 7,119 5,321

Food Prep & Serving 6,767 14,846

Educ., Training & Library 5,532 8,233

Management Occupations 4,988 11,360

Arts, Design, Entertainment 3,476 5,976

Construction & Extraction 3,079 8,117

All Others 12,552 57,868

Totals, All 83,583 163,507Sources: EMSI Total Employment - 2013.2, GMU Center for Regional Analysis

Suburban Maryland Major Sources of Net New Jobs, 2012 – 2017

Sources: EMSI Total Employment - 2013.2, GMU Center for Regional Analysis * % Total of All Net New Jobs

5-Digit SOC Net New % Total % Change

Business & Financial 11,999 14.4 12.4Personal Financial Advisors 3,220 26.8 31.5Management Analysts 3,076 25.6 16.8Accountants & Auditors 991 8.3 7.2Business Ops Specialists 941 7.8 7.6

Healthcare (All) 11,980 14.3 12.7

Home Health Aides 2,677 22.3 30.4Registered Nurses 1,754 14.6 13.0Nursing Aides,Orderlies 1,405 11.7 12.6Massage Therapists 589 4.9 20.9

All Others 59,604 71.3 1.9Total 83,583 100.0 6.5

Suburban Maryland Major Sources of Net New Jobs, 2012 – 2017

Sources: EMSI Total Employment - 2013.2, GMU Center for Regional Analysis * % Total of All Net New Jobs

5-Digit SOC Net New % Total % Change

Personal Care & Service 8,730 10.4 14.2

Personal Care Aides 2,089 23.9 25.4Hairdressers Cosmetologists 1,436 16.4 20.0Childcare Workers 1,140 13.1 7.8Fitness Trainers & Instructors 649 7.4 16.9

Sales & Related 7,361 8.8 4.5Real Estate Sales Agents 3,837 52.1 12.6Financial Services Agents 2,035 27.6 27.8Real Estate Brokers 725 9.8 11.8Cashiers 485 6.6 1.8

All Others 67,492 80.7 6.5Total 83,583 100.0 6.5

2017 Structure of the Greater Washington Economy

Local ServingActivities 37.8%

Non-LocalBusiness 16.2 %

TotalFederal 29.2%

Procurement 12.0%

Assn 1.9 %

Hosp. 2.6%

Int’l 3.9%

Other 1.5%

Other Federal 9.7 %

Health/E

d.

7.0 %

Fed Wages & Salaries 7.5 %

Source: GMU Center for Regional Analysis

Thank You Questions

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