Virginia Government Finance Officers Association The Virginia Economy in 25 and Beyond John C. McClain, AICP Senior Fellow and Deputy Director Center for Regional Analysis, School of Public Policy George Mason University May 2, 25
The National Economy
U.S. Gross Domestic Product % 8 7 6 5 4 3 2 1-1 -2 4.5% 3.7%.8% 1.9% 3.% 4.4% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 1999 2 21 22 23 24 25 3.1% Q1 5
21 24 5 4 3 2 1-1 Productivity 1985 199 1995 198 % 4.9 4.5 4. 23-yr Avg. = 2.1
ISM Manufacturing and Non-Manufacturing Indices 7 65 6 55 5 45 4 35 Non-MFG MFG 5 'Mar-1 'Mar-2 'Mar-3 Mar-4 Mar-5
7 65 6 55 5 Housing Trends: New & Existing Home Sales (s) (s) 15 14 13 12 11 1 9 8 7 Existing (left scale) New (Rt Scale) 'Mar-3 'Mar-2 'Mar-1 Mar-4 Mar-5
2 15 1 5 Consumer Confidence 1 Mar-5 Present Situation Peak Jul 2 Expectations Mar 3 Mar 2 Mar 1 Mar-4
Initial Unemployment Claims Thousands 5 (4-week moving average) 45 4 35 12 Consecutive Months Below 35 35 3 25 Apr 1 Apr 2 Apr 3 Apr 4 Apr-5
Annual Rate of Change in Jobs - US Thru Mar 25 THOUSANDS 5 4 3 2 1-1 -2-3 Jan-99 Jan- Jan-1 Jan-2 Bottom 2.3 M Feb 2 Jan-3 Jan-4 Jan-5 Feb +2.35 M (Highest Rate since Sep 2)
Annual Rate of Change in Employed (HH Survey) Thru Mar 24 THOUSANDS 5 4 3 2 1-1 -2-3 Mar-99 Mar- Mar-1 Mar-2 Turned + Aug 2, 16 mos. before PR Bottom 2. M Jan 2 Mar-3 Mar-4 Mar-5
Leading Index Monthly Over-the-Year Percent Changes % 5 4.89 4.89 4.39 4 3.69 3.98 3.75 3 2 1 2.84 2.12 1.85 1.5 1.14 1.22.35.52-1 -.6 Aug-4 Jul-4 Jun-4 May-4 Apr-4 Mar-4 Feb-4 Jan-4 Jan-5 'Dec-4 Nov-4 Oct-4 Sep-4 Mar-5 Feb-5
Coincident Index Monthly Over-the-Year Percent Changes % 5 4 3.72 3 2 1 2.95 2.63 2.71 2.62 2.69 2.76 2.45 2.44 2.44 2.51 2.28 2.31 1.66 1.22-1 Aug-4 Jul-4 Jun-4 May-4 Apr-4 Mar-4 Feb-4 Jan-4 Mar-5 Feb-5 Jan-5 'Dec-4 Nov-4 Oct-4 Sep-4
The Virginia Economy
24 23 7 6 5 4 3 2 1 GDP/GSP Trends 22 21 2 1999 U.S. Virginia 1997 1998 %
15 1 5-5 -1 Virginia Annual Job Change: 198-24 Average = 61,/Year 86,9-14 -67-22 199 1989 1988 1987 1986 1985 1984 1983 1982 1981 198 1993 1992 1991 24 23 22 21 2 1999 1998 1997 1996 1995 1994 Year
Virginia and Selected States Job Change Mar 4 Mar 5 Thousands 25 228 2 15 125 1 5 78 6 26 26 58 36-5 -13 VA NY MA GA PA CA TX IL MI Not Seasonally Adjusted
Virginia and Selected States Job Change Mar 4 Mar 5 Percent 2.5 2.2 2 1.5 1.5.7.8.7 1. 1.6 1.3.6 -.5-1 -.3 VA NY MA GA PA CA TX IL MI Not Seasonally Adjusted
Percentage 9 8 7 6 5 4 3 2 1 3.4 Virginia and Selected States Ranked by Unemployment Rate March 25 4.9 5. 5.3 5.5 5.7 5.9 5.9 7.6 U.S. 5.4% VA NY GA MA TX CA PA IL MI Not Seasonally Adjusted
1999-24 Job Change By Sector - Virginia (Ranked by Size of Sector) Prof & Bus Svc St & Loc Govt Retail Ed & Hlth Services Manufacturing Leisure & Hosp Construction Financial Federal Other Svcs Transp & Util Wlse Trade Information (s) Total = 172, -8-6 -4-2 2 4 6 8
Mar 4 Mar 5 Job Change By Sector - Virginia (Ranked by Size of Sector) Prof & Bus Svc St & Loc Govt Retail Ed & Hlth Services Manufacturing Leisure & Hosp Construction Financial Federal Other Svcs Transp & Util Wlse Trade Information (s) Total = 78,2-3 -2-1 1 2 3
199-24 Share of Job Growth By Sector U.S. vs Virginia % Prof & Bus Svc Educ & Hlth Svc Retail Trade Leisure & Hosp Const Other Svc Financial Information 6.9 8.4 7.7 7.1 5.3 8.8 6.5 6.6 2. 3.8 14.5 12.5 2.5 25.3 27.1 33.3 US Virginia Mfg Wlse Trade Transp & Util 1.8.9 2.7 2.7 Fed Govt St & Loc Govt 16.7 14.3 1 2 3 4
The Virginia Economy by Metro Area
Metro Areas in Virginia Job Change Last Ten Years Thousands No. Virginia 334 VB-Norfolk-NN 115 Richmond 86 Roanoke Lynchburg Charlottesville Blacksburg Harrisonburg Winchester 11 5 17 9 12 13 Danville -5 5 1 15 2 25 3 35
Metro Areas in Virginia Job Change Last Five Years Thousands No. Virginia 144 VB-Norfolk-NN 41 Richmond 29 Roanoke Lynchburg -6-3 Charlottesville Blacksburg Harrisonburg Winchester 5 3 6 6 Danville -2-5 5 1 15 2
Metro Areas in Virginia Job Change Last 12 Months Thousands No. Virginia 56.8 VB-Norfolk-NN Richmond 1.3 12.1 Roanoke Lynchburg Charlottesville Blacksburg Harrisonburg Winchester 3.9.2 2. 4.6 1.7 1.4 Danville -.4-1 1 2 3 4 5 6 7 8
Metro Areas in Virginia Unemployment Rate Percent Statewide 3.4 No. Virginia 2.6 VB-Norfolk-NN 3.9 Richmond 3.6 Roanoke Lynchburg Charlottesville 2.9 3.4 4. 25 24 Blacksburg 3.8 Harrisonburg 2.8 Winchester 3. Danville 7.3 1 2 3 4 5 6 7 8
Metro Area Unemployment Rates in March BLS Press Release 4/28 Lowest of All Metro Areas 2.6% Honolulu, HI 2.8% Harrisonburg, VA 2.9% Charlottesville, VA 3.% Winchester, VA-WV Of Metro Areas with 1 Million + Population 3.6% Richmond,VA,, Washington-Arlington Arlington- Alex DC-MD MD-VA-WV (No. Virginia = 2.6%) 3.9% Las Vegas, VA Beach-Norfolk Norfolk-NN, NN, VA
The Importance of Federal Spending to the Virginia Economy
Metro Comparisons Job Change Last Five Years (2/ 2/5) 15 Largest Metro Areas Thousands WASHINGTON Miami 193 268 Phoenix Houston Los Angeles Philadelphia Minneapolis 17 42 58 72 158 Atlanta Dallas New York Seattle Boston -98-12 -2 3 3 SF-Oakland Chicago Detroit -118-133 -158-2 -1 1 2 3
Billions Current $ 9 8 7 6 5 4 3 2 1 Total Federal Spending in Virginia Average Annual Increase = 6.5% Total into VA Economy = $768 Bil. 23 22 21 2 1999 1998 1997 1996 1995 1994 1993 1992 1991 199 2-3 Change = +7.9B$, 9.6%
Billions Current $ 4 Federal Spending by Type Virginia Procurement 3 Retirement 2 Wages 1 All Other 1992 1991 199 1995 1994 1993 1997 1996 1999 1998 22 21 2 23
Total Federal Spending in Virginia by Area Billions Current $ 4 3 No. Virginia 2 Rest of State 1 Hampton Rds 22 21 2 1999 1998 1997 1996 1995 1994 1993 1992 1991 199 23
Federal Procurement in Virginia Billions Current $ 4 Total 3 No. Virginia 2 1 Hampton Rest of State 2 1998 1996 1994 1992 199 22
Billions Current $ 4 3 2 Federal Spending by Type Northern Virginia Total Average Annual Increase = 8.8% 199-23 Total = $ 311 Bil. Procurement 1 All Other 2 1999 1998 1997 1996 1995 1994 1993 1992 1991 199 23 22 21
Billions Current $ 4 Federal Spending by Type Hampton Roads 3 2 1 2 1999 1998 1997 1996 1995 1994 1993 1992 1991 199 Average Annual Increase = 3.2% 199-23 Total = $ 187 Bil. Total Procurement 21 All Other 23 22
Procurement Dollars Are More Important Than Salary Dollars Virginia Economic Multipliers Total Output Jobs* Personal Earnings** Payroll $ 1.89 21..475 Procurement $ 1.95 2.9.567 * Per $1 Million ** Procurement-related job has higher earnings ($4,38)
The Outlook for 25+
Productivity, Unemployment and Job Growth Annual Percent Change, 1998-28 8 6 4 Income Productivity Unemployment 2 GDP Job Change -2 28 27 26 25 24 23 22 21 2 1999 1998
Interest Rate Trends and Outlook Average Annual Rate, 1998-28 9 8 7 6 5 4 3 2 1 3-Yr Fixed 1-Yr Treasury Federal Funds Inflation 28 27 26 25 24 23 22 21 2 1999 1998
7 6 5 4 3 2 1 GDP/GSP Outlook Virginia U.S. 1998 1997 2 1999 22 21 24 23 25 27 26 29 28 %
29 21 6 5 4 3 2 1-1 Economic Outlook 21 (Annual % Change) 27 26 25 24 23 22 28 21 2 % GSP Jobs
Job Change in Virginia Annual Average 94-4 23 24 25 26 27 58, 2,7 86,9 97, 85, 75,
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