Key Trends in the Washington Region:Shifting Fundamentals and Headline-Makers

Jeannette ChapmanDeputy Director and Senior Research Associate

Stephen S. Fuller InstituteSchar School of Policy and Government

George Mason University

January 31, 2019

IREM 2019 Industry Forecast & Trade Show

Washington Region:Major Trends

1. Fundamentals:• Improving mix of jobs•Aging population & workforce•Aging business cycle

2. Headline-makers:•Federal disruptions•Amazon

1. Improving Mix of Job Growth

117.1

41.1

8.7

55.070.5 64.2

51.6

24.0 13.0

-50.8

11.1

42.9 39.227.6

17.2

55.7 59.2 50.9 52.1

(60.0) (40.0) (20.0)

- 20.0 40.0 60.0 80.0

100.0 120.0 140.0

2000-2017 Avg: +38,790

Job Change in the Washington Region2000 – 2018 (in thousands)

Sources: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), The Stephen S. Fuller Institute at the Schar School, GMU*Preliminary

0.5

-1.6

8.5

3.0 3.80.9 1.4

-0.4

6.7

12.8

18.9

2.4

-4.4 -5.0

-10.7

1.9 3.5

-0.1

-5.7

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

25.0

Federal Job Change in the Washington Region2000 – 2018 (in thousands)

Sources: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), The Stephen S. Fuller Institute at the Schar School, GMU*Preliminary

25.713.8 12.7 16.4 17.4 19.2 20.1

(10.0) -

10.0 20.0 30.0 40.0 50.0 60.0 70.0

Private, Office-Using All Other

Job Change in the Washington Region2000 – 2018 (in thousands)

Sources: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), The Stephen S. Fuller Institute at the Schar School, GMU*Preliminary

2007-2014: +15,650 Office-Using

0.80.2

3.30.6

2.25.3

2.52.5

9.17.2

-5.78.2

16.0

-10 -5 0 5 10 15 20

ManufacturingWholesale Trade

Transportation & UtilitiesInformation Services

Financial ActivitiesConstruction

Other ServicesRetail Trade

Leisure & HospitalityState & Local Govt

Federal GovtEducation & Health Services

Professional & Business Services

Washington MSA Job Change by Sector 2017 - 2018

Ranked by Size in 2017 (000s) Total = 52,100

Sources: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), The Stephen S. Fuller Institute at the Schar School, GMU

2. Aging Population and Workforce

0%5%

10%15%20%25%30%35%40%45%

U.S.

Washington Region & U.S.Share of Population Aged 55+

1980 – 2017 – 2026

Sources: U.S. Census Bureau (1980 & 1990 Decennial Census, 2000-2010 Intercensal & v17 Population Estimates); U.S. Bureau of Labor StatisticsThe Stephen S. Fuller Institute at the Schar School, GMU NOTE: Population 15+ (WMSA) or civilian, non-institutional population, aged 16+ (US)

Washington Region

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

100.0%

16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90+

Male Female

Labor Force Participation Rates by AgeWashington Region, 2014-2016 Average

Sources: 2014, 2015, 2016 ACS Microdata (Average); The Stephen S. Fuller Institute at the Schar School, GMU

55

65%66%67%68%69%70%71%72%73%74%75%

Forecast

Labor Force Participation RateWashington Region, 1997-2027

Sources: U.S. Bureau of Labor Statistics; U.S. Census (2014-2016 ACS); The Stephen S. Fuller Institute at the Schar School, GMU

2.5% 2.5%2.3%

1.6%1.8%

1.7%1.4%

2.3%1.9%

1.8%

1.1% 1.2%

2.0%

1.7% 1.5%

1.0%1.1%

1.4%1.1% 1.1% 1.0%

0.8% 0.7% 0.8%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2010-2011

2011-2012

2012-2013

2013-2014

2014-2015

2015-2016

2016-2017

D.C.

NorthernVirginiaWashingtonRegionSuburbanMaryland

Population Growth by Sub-State AreaWashington Region, 2010 to 2017

Sources: U.S. Census Bureau (v2017 Population Estimates); The Stephen S. Fuller Institute at the Schar School, GMU

3.1%

2.5% 2.5% 2.4% 2.2%

1.5% 1.4% 1.3% 1.1% 1.0%0.7% 0.7% 0.7% 0.7%

0.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%

US: +1.3%

Percent Change in 25-34 Years OldsLargest 15 Metros, 2016 - 2017

Sources: U.S. Census Bureau (Vintage 2017 &2000-2010 Intercensal Population Estimates); The Stephen S. Fuller Institute at the Schar School, GMU

3. Aging Business Cycle

-3

-2

-1

0

1

2

3

4

5

Washington

U.S.

U.S. GDP and Washington MSA GRP 2007 – 2018 – 2022

(Annual % Change)(%)

Forecast

Sources: U.S. Bureau of Economic Analysis, IHS Markit (January 2019), The Stephen S. Fuller Institute at the Schar School, GMUForecast as of January 2019

-3

-2

-1

0

1

2

3

4

5

Washington

U.S.

U.S. GDP and Washington MSA GRP 2007 – 2018 – 2022

(Annual % Change)(%)

Forecast

Sources: U.S. Bureau of Economic Analysis, IHS Markit (January 2019), The Stephen S. Fuller Institute at the Schar School, GMUForecast as of January 2019

5. Federal Government Disruptions

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

VA

MD

DC

Shutdown

Initial Claims for Unemployment by State

Sources: U.S. Department of Labor, The Stephen S. Fuller Institute at the Schar School, GMU

(000s)

The Changing Structure of the Washington Region Economy

Local Serving Activities

38.0%

Non-Local Serving

Business15.5%

Other Federal

9.4%

Fed Wages & Salaries

7.4%

Procurement14.1%

Total Federal30.9%

Local Serving Activities

39.3%

Non-Local Serving

Business18.5% Total

Federal26.5%

Health/Ed5.5%

Other Federal7.8% Fed Wages &

Salaries6.2%

Procurement12.5%

2018 2030

Source: The Stephen S. Fuller Institute at the Schar School, GMU; Forecast January 2019

6. Amazon

0

100

200

300

400

500

600

Washington MSA

Seattle MSA

Density by Metro Area: Jobs Per Land Square Mile

Sources: U.S. Bureau of Labor Statistics; The Stephen S. Fuller Institute at the Schar School, GMU

400

1,180

1,964

1,439

2,6652,352

1,643

2,207

3,000 3,000

2,305

3,595

2,100

3,900

3,100 3,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000Phase II:12,850

Phase I:25,000

HQ2 Employment Schedule

Sources: Commonwealth of Virginia MOU; The Stephen S. Fuller Institute at the Schar School, GMU

8.7

55.070.5 64.2

51.6

24.013.0

-50.8

11.1

42.9 39.227.6

17.2

55.7 59.250.9 52.2

(60.0)

(40.0)

(20.0)

-

20.0

40.0

60.0

80.0

100.0 HQ2 Avg: +2,366 over 16 years( = 7% of 2002-2017 net change)

Job Change in the Washington Region2000 – 2018 (in thousands)

Sources: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), The Stephen S. Fuller Institute at the Schar School, GMU*First ten months

Amazon-Related Renters in Select Jurisdictions Assumes 37,850 HQ2 jobs, includes indirect & induced effects

Sources: U.S. Census Bureau (2016 ACS Microdata); The Stephen S. Fuller Institute at the Schar School, GMU*Includes the cities of Fairfax and Falls Church ** Includes the cities of Manassas and Manassas Park

Renters at Full Build-Out

Renters in 2016

Total % Increasefrom 2016

VirginiaArlington County 4,792 57,133 8.4%Alexandria City 1,528 41,808 3.7%Fairfax County* 4,893 134,425 3.6%Prince William County** 1,087 49,891 2.2%Loudoun County 716 25,552 2.8%

D.C. 2,968 169,875 1.7%Maryland

Montgomery County 625 132,098 0.5%Prince George's County 396 121,333 0.3%

The Economic Outlook

Employment Change by Sub-State Area(000s)

Source: BLS, IHS Economics, The Stephen S. Fuller Institute at the Schar School, GMU (forecast as of January 2019)NOTE: The regional totals include Jefferson, WV.; Sub-state areas re-weighted to sum to region-wide total *Preliminary

Average Annual Change 2000-2017 = 38,800

2015 2016 2017 2018* 2019 2020 2021 2022

D.C. 15.7 14.5 8.9 6.9 4.6 5.0 4.2 5.2

Sub. MD 10.5 14.2 15.2 13.9 11.0 9.1 7.1 9.3

No. VA 29.5 30.6 26.8 31.3 22.3 17.6 16.0 17.5

REGION 55.7 59.2 50.9 52.1 38.2 31.8 27.4 32.1

4.8%

5.4%

36.3%

-1.7%

3.6%

7.4%

12.0%

0.1%

5.2%

27.8%

-5% 0% 5% 10% 15% 20% 25% 30% 35% 40%

Information Services

Financial Activities

Construction

Other Services

Retail Trade

Leisure & Hospitality

State & Local Govt

Federal Govt

Edu. & Health Services

Prof. & Business Services

All Jobs: +11.4%

Job Change in the Washington Region Select Sectors: 2018 - 2030

Source: IHS Economics; The Stephen S. Fuller Institute at the Schar School, GMU

Thank YouFor monthly reports on the

Washington region’s economic performance go to

sfullerinstitute.gmu.edu@FullerInstitute