the 10th annual real deal seminar

The Real Deal 2015

January 27, 2015

The Current Performance and Near-

Term Outlook for the U.S. and

Washington Area Economies

Stephen S. Fuller, Ph.D.

Dwight Schar Faculty Chair and University Professor

Director, Center for Regional Analysis

George Mason University

-10

-8

-6

-4

-2

0

2

4

6

2007 2008 2009 2010 2011 2012 2013 2014 2015

U.S. Gross Domestic Product

Quarterly Change: 2007 – 2015%

Forecast

Source: Bureau of Economic Analysis, IHS Economics January 8, 2015

U.S. Leading IndexMonth-Over-Year Percent Change

-25

-20

-15

-10

-5

0

5

10

15

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: The Conference Board, GMU Center for Regional Analysis

U.S. Coincident IndexMonth-Over-Year Percent Change

-12

-10

-8

-6

-4

-2

0

2

4

6

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan


2006 2007 2008 2009 2010 2011 2012 2013 2014

-8000

-6000

-4000

-2000

0

2000

4000

Annual Change in Payroll Jobs – USMonth-Over-Year

(000s)

Dec =

+ 3.0M

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

U.S. Payroll Job Change by Sector

Dec 2013 – Dec 2014

15

-17

146

58

111

339

121

186

421

250

108

732

482

-600 -400 -200 0 200 400 600 800

Information

Federal Govt.

Transp. & Util.

Other Services

Wlse Trade

Construction

Financial

Manufacturing

Leisure & Hosp.

Retail Trade

State & Local Govt

Prof. & Bus. Svcs

Educ & Health Svcs

(000s) Total = 2,951Ranked by Size in 2014

Source: Bureau of Labor Statistics (Seasonally Adjusted), GMU Center for Regional Analysis

U.S. Payroll Job Change by Sector

Nov 2014 – Dec 2014

2

1

5

2

10

50

10

17

36

8

11

52

48

-100 -50 0 50 100

Information

Federal Govt.

Transp. & Util.

Other Services

Wlse Trade

Construction

Financial

Manufacturing

Leisure & Hosp.

Retail Trade

State & Local Govt

Prof. & Bus. Svcs

Educ & Health Svcs

(000s) Total = 252Ranked by Size in 2014

Source: Bureau of Labor Statistics (Seasonally Adjusted), GMU Center for Regional Analysis

4

5

6

7

8

9

10

11

U.S. Unemployment Rate

Source: Bureau of Labor Statistics (Seasonally Adjusted), IHS Economics January 8, 2015

Dec = 5.6

%

IHS FCST

14 – 6.2

15 – 5.5

16 – 5.3

17 – 5.2

18 – 5.3

19 – 5.3

Oil Prices$ per barrel

0

20

40

60

80

100

1202

00

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

$/barrel

Source: IHS Economics January 8, 2015

Forecast > > > > > > >

0

20

40

60

80

100

120

140

Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14

100

Consumer Confidence


Expectations

Current Situation

-1

0

1

2

3

4

5

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

Consumer Prices

2001 - 2019

Forecast > > > > >

%

Source: Bureau of Labor Statistics, IHS Economics January 8, 2015

-

1

2

3

4

5

6

7

8

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

30-Yr

10-Yr Treas

Fed

Interest Rates

2001 - 2019

Forecast > > > >

Source: IHS Economics January 8, 2015

Growth in Total Consumption Outlays

2.6

3.1

3.83.5

3.0

2.2

-0.3

-1.6

1.92.3

1.8

2.4 2.5

3.43.0 2.9

2.4 2.4

-2

-1

0

1

2

3

4

5

6

%


Forecast > > > > >

-25

-20

-15

-10

-5

0

5

10

15

20

GDP

Non-Res: Structures

Bus. Inv.-Eq & Sfwr

Residential Fixed

State & Local

Federal

%

U.S. Economic Performance


Forecast > > > >

The Washington Economy:

The Recession, Sequester

And Federal Shutdown

The Economic Performance of Maryland, DC

and the Commonwealth of Virginia in 2013

State GSP Growth 2012-2013 US Ranking

US 1.84%

Virginia 0.06% 48th

Maryland 0.01% 49th

DC* - 0.49% 51st

_________________________________________________________________________

Source: U.S. Bureau of Economic Analysis *DC’s GSP also declined 0.5% in 2012.

WMSA Payroll Job Change: Private SectorThe Great Recession and Recovery

-4

-7

-10

-12

-10

-8

-48

-34

-23

0

-23

-80 -60 -40 -20 0

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

Educ & Health Svcs

Prof. & Bus. Svcs

(000s)


Total -178

Aug 2008-Feb 2010

The GRP* Effects of Private Sector Job Change

in the Washington Metropolitan Area

Aug 2008-Feb 2010 (in 2014 $s) ____________________________

Job Change Total GRP Value

- 177,700 - $28,467,350,0001

____________________________Source: GMU Center for Regional Analysis

*Gross Regional Product1 $156,199 per job contribution to GRP

WMSA Payroll Job Change: Private SectorThe Great Recession and Recovery

-4

-7

-10

-12

-10

-8

-48

-34

-23

0

-23

-80 -60 -40 -20 0

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

Educ & Health Svcs

Prof. & Bus. Svcs

(000s)


4

2

11

12

25

58

39

49

44

0 20 40 60 80

Total -178 Total 243

Aug 2008-Feb 2010 Feb 2010-Nov 2014

The GRP* Effects of Private Sector Job Change

in the Washington Metropolitan Area

Aug 08-Nov. 14 (in billions of 2014 $s) ____________________________

Job Change Total GRP Value

- 177,700 - $28,467,350,0001

+ 242,400 + $27,483,800,0002

+ 64,700 -$983,550,000

____________________________Source: GMU Center for Regional Analysis

*Gross Regional Product1 $156,199 per job contribution to GRP2 $113,382 per job contribution to GRP

Summary of Federal Spending Trends in the

Washington Metropolitan Area, 2010-2014

• Federal Procurement Outlays declined $13.3

billion or 16.1% between FY 2010 and FY 2013.

• Federal employment has declined since peaking in

July 2010, losing 21,800 jobs or 5.6%.

• Federal payroll declined by $2.4 billion or 5.7%

between FY 2010 and FY 2014 and will continue to

decline as the workforce shrinks and older workers

retire and are replaced by younger workers.

150

200

250

300

350

400

1950

1955

1960

19

65

1970

19

75

1980

1985

1990

1995

2000

2005

2010

Federal Employment in the

Washington Metro Area, 1950-2014000s Eisenhower Kennedy –

Johnson

Nixon -

FordCarter Reagan Bush 1 Clinton Bush 2

- 5

+ 74

+ 35+17 0 +8 - 55

+ 23

Obama

+21

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

-17

=+4

Federal Government

Washington MSA

-20

-15

-10

-5

0

5

10

15

20

25

30

2002

2005

2008

Ma

r

Jun

Sep

Dec

Ma

r

Jun

Sep

Dec

Ma

r

Jun

Sep

Dec

Ma

r

Jun

Sep

Dec

Ma

r

Jun

Sep

Dec

Ma

r

Jun

Sep

(000s)

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Nov-14 Total: 365.7

Annual Data Annual Month over Year

2009 2010 2011 2012 2013 2014

Year Total Federal %

1950 592.4 227.2 38.4

1960 745.7 236.2 31.7

1970 1,184.6 321.7 27.2

1975 1,336.8 347.0 26.0

1980 1,937.9 367.7 19.0

2000 2,679.3 326.2 12.2

2010 2,966.6 380.2 12.8

2020 3,379.4 340.9 10.1

Sources: U.S. Bureau of Labor Statistics ; GMU Center for Regional Analysis

Federal Employment as a Percentage

of Total Employment in Washington

1950-2020 (jobs in thousands)

0

10

20

30

40

50

60

70

80

90

Federal Procurement in the

Washington Metro Area, FY 1980-2014$ Billions

TOTAL = $1,164.9 Billion

Source: US Census, Consolidated Federal Funds Report and USAspending.gov

79.8

69.171.2

76.3

Professional & Business Services

Washington MSA

-20

-15

-10

-5

0

5

10

15

20

25

30

2002

2005

2008

Ma

r

Jun

Sep

Dec

Ma

r

Jun

Sep

Dec

Ma

r

Jun

Sep

Dec

Ma

r

Jun

Sep

Dec

Ma

r

Jun

Sep

Dec

Ma

r

Jun

Sep

(000s) Annual Data Annual Month over Year

2009 2010 2011 2012 2013 2014

Nov-14 Total: 708.5Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

44.1 48.6

58.1 $94.2

$51.4

$24.1

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Professional &Business Services

Education & HealthServices

Leisure & Hospitality

2/2010-11/2014 Job Change(left axis)

2013 Wage(right axis)

Source: Bureau of Labor Statistics, GMU Center for Regional Analysis

Average Wage and Job Change

Washington Metro Area

(000s)(000s of

2013 $s

63.0 63.0 63.9

65.5 66.2

67.1

68.2

67.8

69.5

70.6 69.8

69.3

68.3

58.0

60.0

62.0

64.0

66.0

68.0

70.0

72.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Average Wages,

Washington Metro Area(000s of 2013 $s)

Source: Bureau of Labor Statistics, GMU Center for Regional Analysis

The Household Income Effects of Structural

Change in the Washington Metropolitan Area _____________________________________________________________________________________

Jurisdiction Median HH Income 2013* Change from 2009*

District (DC) $67,575 $2,919

Frederick Cty 84,308 - $5,856

Montgomery Cty 98,326 - $4,552

Prince George’s Cty 72,052 - $4,060

Arlington County 102,501 - $1,675

Fairfax County 111,079 - $249

Loudoun County 116,768 - $7,283

Prince Wm County 95,268 - $2,234

Alexandria City 86,775 $2,985

Total Metro Area $90,149 - $2,287______________________________________________________________________________________

Source: U.S. Census, ACS 1-Year; GMU Center for Regional Analysis *in 2013 dollars

15 Largest Metro Area Job Markets

GRP Percent Change: 2012 – 2013

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Washington -0.8%

Source: Bureau of Economic Analysis, GMU Center for Regional Analysis

Job Change in the 15 Largest

Metropolitan Areas: 2009 –2010

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%Washington +0.4%


15 Largest Job Markets

Job Change: Nov 2013 – Nov 2014

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%Washington +0.6%


15 Largest Job Markets

Job Change: Nov 2013 – Nov 2014

-20

0

20

40

60

80

100

120

140(000s)

Washington +18,900


Annual Job Change

Washington MSA, 2002-2014

-80

-60

-40

-20

0

20

40

60

80

100

20

02

20

05

20

08

(000s)Annual Data Annual Month over Year

2010 2011 2012 2013 2014


Job Change by Sector

Nov 2013 – Nov 2014

Washington MSA

0

2

-3

-3

4

1

4

3

3

8

-2

-4

5

(20.0) (10.0) - 10.0 20.0 30.0

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

(000s) Total = 18,900



Oct 2014 – Nov 2014

Washington MSA

1

0

-1

0

0

0

0

-2

10

3

1

0

5

(20.0) (10.0) - 10.0 20.0 30.0

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

(000s) Total = 18,600


Job Change in the District of Columbia

by Sector, Nov 2013 - Nov 2014

0

0

0

0

0

0

1

1

3

2

1

-1

6

(20.0) (10.0) - 10.0 20.0 30.0

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

(000s) Total 12,600


Job Change in the District of Columbia

by Sector, Oct 2013 – Nov 2014

0

0

0

0

0

0

0

-1

1

0

-1

0

1

(20.0) (10.0) - 10.0 20.0 30.0

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

(000s) Total 1,400


Job Change in Suburban Maryland

by Sector, Nov 2013 – Nov 2014

1

0

-1

-1

1

0

-3

2

0

3

3

-1

2

(20.0) (10.0) - 10.0 20.0 30.0

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

(000s) Total 4,300


Job Change in Suburban Maryland

by Sector, Oct 2014 – Nov 2014

1

0

0

0

0

0

0

-1

3

1

0

0

0

(20.0) (10.0) - 10.0 20.0 30.0

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

(000s) Total 3,800



Nov 2013 – Nov 2014

Northern Virginia

-1

0

0

-1

2

1

3

-1

1

6

2

-1

-4

(20.0) (10.0) - 10.0 20.0 30.0

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

(000s) Total 6,500



Oct 2014 – Nov 2014

Northern Virginia

0

0

0

1

0

0

-1

0

7

2

1

1

3

(20.0) (10.0) - 10.0 20.0 30.0

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

(000s) Total 13,600


0

2

4

6

8

10

12

7.0 – DC

5.8 – U.S.

4.7 – SMD

4.5 – MSA

3.7 - NVA

Unemployment Rates in the WMSA

By Sub-State Area, 2007-2014

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

GRP and Jobs Forecast for

Washington Metropolitan Area:

2014-2019

2010 Structure of the

Greater Washington Economy

Local Serving

Activities

34.8%

Non-Local

Business

12.0 %

Total

Federal

39.8%Procurement

19.1%

Other Federal

10.7 %

Fed Wages & Salaries

10.0%

Source: GMU Center for Regional Analysis

-2

-1

0

1

2

3

4

5

6

%

Source: GMU Center for Regional Analysis, Forecast: January 2015

Economic Outlook (GRP), 2007-2019

Washington Area and Sub-State Areas(Annual % Change)

DC

SM

MSANV

Principal Sources of Job and GRP

Growth in the Washington Area, 2014-2019(in thousands)

Growth Job % of Total Average Value

Sectors Change Job Change Added per Job*

Prof. & Bus. Ser. 114.4 48.3 $157,969

Construction 48.8 20.5 $111,992

Education/Health 28.7 12.1 $72,162

Hospitality Services 27.1 11.4 $51,110

State and Local 20.2 8.5 $81,736

Sub-Total 239.2 100.8 $119,749

Overall Total 236.9 100.0 $154,131

Sources: IHS Global Insight; GMU Center for Regional Analysis *in 2014$s

Job and GRP Gains and Losses for

the Washington Area’s Other Sectors, 2014-2019 (in thousands)

Job % of Total Average Value

Change Job Change Added per Job*

Federal Gov’t - 22.3 - 9.4 $185,804

Retail Trade 0.5 0.2 $64,478

Other Services 2.6 1.1 $86,150

Financial Services - 0.1 0.0 $620,922

Information Services 2.0 0.9 $410,371

Manufacturing 0.0 0.0 $249,934

Transportation 8.8 3.7 $203,015

Wholesale Trade 6.2 2.6 $215,783

Sub-Totals - 2.3 - 0.9 $197,811

Overall Total 236.9 100.0 $154,131

Sources: IHS Economics, Inc.; GMU Center for Regional Analysis *in 2014 $s

Employment Change in the WMSA

by Sub-State Area (000s)

2012 2013 2014* 2015 2016 2017 2018 2019

D.C. 8.5 9.3 6.6 7.9 9.1 11.0 12.7 11.7

Sub. MD 3.8 5.6 8.1 12.5 17.0 20.1 16.9 15.8

No. VA 23.3 10.7 4.6 15.6 22.8 26.7 19.0 17.9

REGION 35.6 25.6 19.3 36.0 48.9 58.0 48.6 45.4

Average Annual Change 1990-2010 = 30,700

Source: BLS, IHS Economics, GMU Center for Regional Analysis (January 2015)

NOTE: The regional totals do not include Jefferson, WV.

*average through 11 months; rebenchmarked jobs data available in March 2015

-4

-2

0

2

4

%

Source: IHS Economics, GMU Center for Regional Analysis, Forecast: January 2015

U.S. GDP and Washington Area GRP

2007 – 2015 – 2019(Annual % Change)

Washington

U.S.

2019 Structure of the

Greater Washington Economy

Local Serving

Activities

38.2%

Non-Local

Business

17.6%

Total

Federal

28.8%Procurement

13.1%

Other Federal

8.4%

Fed Wages & Salaries

7.3%

Source: GMU Center for Regional Analysis

Thank You & Questions

cra.gmu.edu

By: Anirban BasuSage Policy Group, Inc.

January 27th, 2015

The Pit and the Pendulum

On Behalf of

The Real Deal Seminar

Dawn of the Dead

Real GDP Growth, 20 Fastest and Slowest Growing CountriesProjected 2014, Annual Percent Change (for available nations)

Rank Country Region % Rank Country Region %

1 Turkmenistan Central Asia 10.1 169 Netherlands Europe 0.6

2 Chad Africa 9.6 170 France Europe 0.4

3 Mongolia Asia 9.1 171 Brazil South America 0.3

4 Democratic Republic of the Congo Africa 8.6 172 Russia Eastern Europe 0.2

5 Côte d'Ivoire Africa 8.5 173 Solomon Islands Pacific Islands 0.1

6 Myanmar Southeast Asia 8.5 174 San Marino Europe 0.0

7 Mozambique Africa 8.3 175 Italy Europe -0.2

8 Ethiopia Africa 8.2 176 Finland Northern Europe -0.2

9 Sierra Leone Africa 8.0 177 Serbia Eastern Europe -0.5

10 China Asia 7.4 178 Barbados Caribbean -0.6

11 Lao P.D.R. Southeast Asia 7.4 179 Croatia Eastern Europe -0.8

12 The Gambia Africa 7.4 180 St. Lucia Caribbean -1.1

13 Tanzania Africa 7.2 181 Argentina South America -1.7

14 Cambodia Southeast Asia 7.2 182 Equatorial Guinea Africa -2.5

15 Uzbekistan Central Asia 7.0 183 Iraq Middle East -2.7

16 Sri Lanka Southeast Asia 7.0 184 Venezuela South America -3.0

17 Nigeria Africa 7.0 185 Cyprus Europe -3.2

18 Mauritania Africa 6.8 186 Ukraine Eastern Europe -6.5

19 Burkina Faso Africa 6.7 187 South Sudan Africa -12.3

20 Panama Central America 6.6 188 Libya Middle East -19.8

Source: International Monetary Fund, October 2014 WEO Database

Estimated Growth in Output by Select Global Areas2015 Projected*

3.2%0.3%

1.3%3.3%

6.3%6.8%

6.4%-3.0%

2.9%4.9%

4.3%3.6%

2.3%2.7%

0.6%2.0%

0.4%1.3%

0.9%1.2%

2.4%

-5.0% -3.0% -1.0% 1.0% 3.0% 5.0% 7.0% 9.0%

MexicoBrazil

Latin America and CaribbeanMiddle East, North Africa, Afghanistan, & Pakistan

India***China

Developing AsiaRussia

Central/eastern EuropeSub-Saharan Africa

Emerging/developing countries**United States

CanadaUnited Kingdom

JapanSpain

ItalyGermany

FranceEuro area

Advanced economies

Annual % Change

Source: International Monetary Fund, January 2015 WEO Update

*Real effective exchange rates are assumed to remain constant at the levels prevailing during December 8, 2014–January 5, 2015.

**The quarterly estimates and projections account for approximately 80 percent of the emerging market and developing economies.

***For India, data and forecasts are presented on a fiscal year basis and output growth is based on GDP at market prices.

Corresponding growth rates for GDP at factor cost are 5.6 and 6.3 percent for 2014/15 and 2015/16, respectively.

Jobs 0.3%

Incomes 4.7%

Profits 61.0%

Housing -6.8%

Stocks 33.5%

-70%

-50%

-30%

-10%

10%

30%

50%

70%

2008 2009 2010 2011 2012 2013 2014

Per

cen

t ch

ange

sin

ce e

nd

of

200

7

What Lies Beneath

Source: BEA, BLS, S&P Case-Shiller, Yahoo! Finance

*Through June 2014

Source: U.S. Bureau of Labor Statistics

Median Weekly Earnings, Full-Time U.S. Workers*2000Q4 through 2014Q4

*SA, Constant 1982-1984 dollars (adjusted to CPI-U)Wage and salary workers ages 16+

$320

$325

$330

$335

$340

$345

$350

200

0Q

4

200

1Q2

200

1Q4

200

2Q2

200

2Q4

200

3Q2

200

3Q4

200

4Q

2

200

4Q

4

200

5Q2

200

5Q4

200

6Q

2

200

6Q

4

200

7Q2

200

7Q4

200

8Q

2

200

8Q

4

200

9Q

2

200

9Q

4

2010

Q2

2010

Q4

2011

Q2

2011

Q4

2012

Q2

2012

Q4

2013

Q2

2013

Q4

2014

Q2

2014

Q4

Source: Bureau of Labor Statistics

Employment Cost Index

12-Month Percent Change (NSA)

All Civilian workers, all industries, NSA

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

200

1Q1

200

1Q3

200

2Q1

200

2Q3

200

3Q1

200

3Q3

200

4Q

1

200

4Q

3

200

5Q1

200

5Q3

200

6Q

1

200

6Q

3

200

7Q1

200

7Q3

200

8Q

1

200

8Q

3

200

9Q

1

200

9Q

3

2010

Q1

2010

Q3

2011

Q1

2011

Q3

2012

Q1

2012

Q3

2013

Q1

2013

Q3

2014

Q1

2014

Q3

Wages & Salaries Benefits

Source: Moody’s Economy

Recession Watchas of September 2014

Source: Pew analysis of U.S. Census Bureau’s quarterly tax revenue data, as adjusted by the Rockefeller Institute of Government

Tax Collections in 2014Q2 vs. Each State’s Peak*Real tax revenue still lower in 29 states since recession

*Adjusted for inflation

Industrial ProductionJanuary 2001 through December 2014

Source: Federal Reserve

The industrial production index measures the real output of the manufacturing, mining, and electric and gas utilities industries.

80

85

90

95

100

105

110

Jan

-01

Jun

-01

No

v-0

1

Ap

r-0

2

Sep

-02

Feb

-03

Jul-

03

Dec

-03

May

-04

Oct

-04

Mar

-05

Au

g-0

5

Jan

-06

Jun

-06

No

v-0

6

Ap

r-0

7

Sep

-07

Feb

-08

Jul-

08

Dec

-08

May

-09

Oct

-09

Mar

-10

Au

g-1

0

Jan

-11

Jun

-11

No

v-11

Ap

r-12

Sep

-12

Feb

-13

Jul-

13

Dec

-13

May

-14

Oct

-14

Ind

ex

(20

07

= 1

00

)

(Base year: 2007)

Invasion of the Body Snatchers

-1,000

-800

-600

-400

-200

0

200

400

600Ja

n-0

2

Au

g-0

2

Mar

-03

Oct

-03

May

-04

Dec

-04

Jul-

05

Feb

-06

Sep

-06

Ap

r-0

7

No

v-0

7

Jun

-08

Jan

-09

Au

g-0

9

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-

12

Feb

-13

Sep

-13

Ap

r-14

No

v-14

Th

ou

san

ds


December 2014: +252K

Net Change in U.S. Jobs, BLSJanuary 2002 through December 2014

National Nonfarm Employmentby Industry SectorDecember 2013 v. December 2014

15

49

58

91

121

186

290

421

482

507

732

0 200 400 600 800

Information

Mining and Logging

Other Services

Government

Financial Activities

Manufacturing

Construction

Leisure and Hospitality

Education and Health Services

Trade, Transportation, and Utilities

Professional and Business Services

Thousands, SA

All told 2,952K Jobs gained


Maryland Nonfarm Employmentby Industry Sector Groups (SA)November 2013 v. November 2014Absolute Change

-2,800

-2,500

-2,000

-300

200

900

2,100

3,100

6,400

7,000

-10,000 -5,000 0 5,000 10,000

Information

Government

Manufacturing


Other Services

Mining, Logging, and Construction





MD Total:

+12.1K; +0.5%

US Total (SA):

+2,784K; +2.0%


*According to the Local Area Unemployment Statistics (LAUS) series MD added 4,281 jobs between November 2013 and November 2014.

-900

-900

-700

200

400

1,300

1,800

2,800

3,700

6,800

-10,000 -5,000 0 5,000 10,000

Information

Other Services

Manufacturing

Government







Baltimore-Towson MSA Nonfarm Employmentby Industry Sector Groups (NSA)November 2013 v. November 2014Absolute Change

Baltimore MSA Total:

+14.5K; +1.1%

MD Total (SA):

+12.1K; +0.5%

US Total (SA):

+2,784K; +2.0%


Washington, DC-Arlington-Alexandria MSA Nonfarm Employmentby Industry Sector Groups (NSA)November 2013 v. November 2014Absolute Change

-2,800

-2,500

-1,800

800

3,100

3,700

4,400

4,600

4,700

4,700

-10,000 -5,000 0 5,000 10,000

Information

Manufacturing


Other Services






Government

DC MSA Total:

+18.9K; +0.6%

US Total (SA):

+2,784K; +2.0%


U.S. Year-over-year Percent Change: 2.0%

Employment Growth, U.S. States (SA) November 2013 v. November 2014 Percent Change

RANK STATE % RANK STATE % RANK STATE %

1 NORTH DAKOTA 4.8 17 MINNESOTA 1.9 34 MAINE 1.1

2 TEXAS 3.9 17 TENNESSEE 1.9 36 IOWA 1.0

3 UTAH 3.4 17 WISCONSIN 1.9 36 MICHIGAN 1.0

4 DELAWARE 3.0 21 MASSACHUSETTS 1.8 38 NEW YORK 0.9

4 FLORIDA 3.0 21 NEW MEXICO 1.8 38 WEST VIRGINIA 0.9

4 OREGON 3.0 23 ALABAMA 1.7 40 NEW HAMPSHIRE 0.8

7 WASHINGTON 2.8 23 DISTRICT OF COLUMBIA 1.7 40 WYOMING 0.8

8 ARIZONA 2.6 23 IDAHO 1.7 42 SOUTH DAKOTA 0.7

8 NORTH CAROLINA 2.6 26 HAWAII 1.6 43 ILLINOIS 0.6

8 SOUTH CAROLINA 2.6 27 ARKANSAS 1.5 43 NEBRASKA 0.6

11 GEORGIA 2.4 27 CONNECTICUT 1.5 43 PENNSYLVANIA 0.6

12 COLORADO 2.3 27 MISSOURI 1.5 46 KANSAS 0.5

12 NEVADA 2.3 30 MONTANA 1.4 46 MARYLAND 0.5

14 CALIFORNIA 2.2 31 VERMONT 1.3 48 VIRGINIA 0.4

15 KENTUCKY 2.1 32 OHIO 1.2 49 NEW JERSEY 0.3

16 OKLAHOMA 2.0 32 RHODE ISLAND 1.2 50 MISSISSIPPI -0.1

17 INDIANA 1.9 34 LOUISIANA 1.1 51 ALASKA -0.4


U.S. Unemployment Rate: 5.8%

Unemployment Rates, U.S. States (SA) November 2014RANK STATE % RANK STATE % RANK STATE %

1 NORTH DAKOTA 2.7 17 VIRGINIA 5.0 35 ILLINOIS 6.4

2 NEBRASKA 3.1 19 PENNSYLVANIA 5.1 35 NEW JERSEY 6.4

3 SOUTH DAKOTA 3.3 20 WISCONSIN 5.2 35 NEW MEXICO 6.4

4 UTAH 3.6 21 MARYLAND 5.6 38 CONNECTICUT 6.5

5 MINNESOTA 3.7 21 MISSOURI 5.6 38 LOUISIANA 6.5

6 IDAHO 3.9 23 INDIANA 5.7 40 ALASKA 6.6

7 HAWAII 4.0 23 MAINE 5.7 41 MICHIGAN 6.7

8 COLORADO 4.1 25 ARKANSAS 5.8 41 SOUTH CAROLINA 6.7

8 NEW HAMPSHIRE 4.1 25 FLORIDA 5.8 43 ARIZONA 6.8

10 IOWA 4.3 25 MASSACHUSETTS 5.8 43 TENNESSEE 6.8

10 KANSAS 4.3 25 NORTH CAROLINA 5.8 45 NEVADA 6.9

10 MONTANA 4.3 29 NEW YORK 5.9 46 OREGON 7.0

10 VERMONT 4.3 30 ALABAMA 6.0 47 RHODE ISLAND 7.1

14 OKLAHOMA 4.4 30 DELAWARE 6.0 48 CALIFORNIA 7.2

15 WYOMING 4.5 30 KENTUCKY 6.0 48 GEORGIA 7.2

16 TEXAS 4.9 33 WASHINGTON 6.2 50 MISSISSIPPI 7.3

17 OHIO 5.0 34 WEST VIRGINIA 6.3 51 DISTRICT OF COLUMBIA 7.4Source: U.S. Bureau of Labor Statistics

Nightmare on Elm Street

15-Year & 30-Year Fixed Mortgage Rates February 1995 through January 2015*

Source: Freddie Mac

2.93%

3.63%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Feb

-95

Sep

-95

Ap

r-9

6

No

v-9

6

Jun

-97

Jan

-98

Au

g-9

8

Mar

-99

Oct

-99

May

-00

Dec

-00

Jul-

01

Feb

-02

Sep

-02

Ap

r-0

3

No

v-0

3

Jun

-04

Jan

-05

Au

g-0

5

Mar

-06

Oct

-06

May

-07

Dec

-07

Jul-

08

Feb

-09

Sep

-09

Ap

r-10

No

v-10

Jun

-11

Jan

-12

Au

g-1

2

Mar

-13

Oct

-13

May

-14

Dec

-14

Rat

e

15-yr 30-yr

*Week ending 1/22/2015

U.S. New Home SalesJanuary 1999 through November 2014

Source: U.S. Census Bureau

November 2014438K

0

200

400

600

800

1,000

1,200

1,400

1,600

Th

ou

san

ds,

SA

AR

U.S. Housing StartsJanuary 1999 through December 2014


0

500

1,000

1,500

2,000

2,500

Jan

-99

Jun

-99

No

v-9

9

Ap

r-0

0

Sep

-00

Feb

-01

Jul-

01

Dec

-01

May

-02

Oct

-02

Mar

-03

Au

g-0

3

Jan

-04

Jun

-04

No

v-0

4

Ap

r-0

5

Sep

-05

Feb

-06

Jul-

06

Dec

-06

May

-07

Oct

-07

Mar

-08

Au

g-0

8

Jan

-09

Jun

-09

No

v-0

9

Ap

r-10

Sep

-10

Feb

-11

Jul-

11

Dec

-11

May

-12

Oct

-12

Mar

-13

Au

g-1

3

Jan

-14

Jun

-14

No

v-14

Th

ou

san

ds,

SA

AR

1 Unit 5 units or more

December 2014:1 Unit: 728K5 Units or more: 339K


U.S. Homeownership

2014Q3:64.3%

60%

62%

64%

66%

68%

70%Q

1-19

80

Q3-

198

1

Q1-

198

3

Q3-

198

4

Q1-

198

6

Q3-

198

7

Q1-

198

9

Q3-

199

0

Q1-

199

2

Q3-

199

3

Q1-

199

5

Q3-

199

6

Q1-

199

8

Q3-

199

9

Q1-

200

1

Q3-

200

2

Q1-

200

4

Q3-

200

5

Q1-

200

7

Q3-

200

8

Q1-

2010

Q3-

2011

Q1-

2013

Q3-

2014

U.S. Housing Building PermitsJanuary 1999 through December 2014


0

500

1,000

1,500

2,000

2,500

Jan

-99

Jun

-99

No

v-9

9

Ap

r-0

0

Sep

-00

Feb

-01

Jul-

01

Dec

-01

May

-02

Oct

-02

Mar

-03

Au

g-0

3

Jan

-04

Jun

-04

No

v-0

4

Ap

r-0

5

Sep

-05

Feb

-06

Jul-

06

Dec

-06

May

-07

Oct

-07

Mar

-08

Au

g-0

8

Jan

-09

Jun

-09

No

v-0

9

Ap

r-10

Sep

-10

Feb

-11

Jul-

11

Dec

-11

May

-12

Oct

-12

Mar

-13

Au

g-1

3

Jan

-14

Jun

-14

No

v-14

Th

ou

san

ds,

SA

AR

1 Unit 5 units or more

December 2014:1 Unit: 667K5 Units or more: 338K

Retail Property Sales – From Suburbs to Cities

Source: Jones Lang LaSalle, Real Capital Analytics

6.1%15.7% 19.1%4.4%

7.4%

16.7%21.1%

16.8%

16.1%20.2%14.0%

13.2%11.0%13.1%

12.5%21.9%19.5%

10.3%

9.7% 6.6% 7.2%1.9% 3.4% 3.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1-Q3 2007 Q1-Q3 2013 Q1-Q3 2014

Theatre

Big Box

Drug Store

Unanchored

Mall

Power Center

Anchored

Grocery

Freestanding/single tenant

Urban/store front

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2.2%2.8%

3.7% 3.8%4.4% 4.5% 4.5% 4.8%

6.9% 7.1% 7.3% 7.5%

9.2%

12-M

on

th %

Ch

ange

S&P/Case-Shiller Home Price Indices for Select Metros October 2014, 12-Month Percentage Change

Source: Standard & Poor’s

Home Sale Prices – Maryland & United States2001Q1 through 2014Q3

Source: FHFA House Price Index

-6%

-4%

-2%

0%

2%

4%

6%

200

1Q1

200

1Q3

200

2Q1

200

2Q3

200

3Q1

200

3Q3

200

4Q

1

200

4Q

3

200

5Q1

200

5Q3

200

6Q

1

200

6Q

3

200

7Q1

200

7Q3

200

8Q

1

200

8Q

3

200

9Q

1

200

9Q

3

2010

Q1

2010

Q3

2011

Q1

2011

Q3

2012

Q1

2012

Q3

2013

Q1

2013

Q3

2014

Q1

2014

Q3

Pe

rce

nt

Ch

an

ge

fro

m P

rece

din

g P

eri

od

Maryland

United States

*The HPI is calculated using home sales price

information from Fannie Mae and Freddie Mac mortgages.

Psycho

December-1492.6

0

20

40

60

80

100

120

200

520

07

Feb

-08

Ap

r-0

8Ju

n-0

8A

ug

-08

Oct

-08

Dec

-08

Feb

-09

Ap

r-0

9Ju

n-0

9A

ug

-09

Oct

-09

Dec

-09

Feb

-10

Ap

r-10

Jun

-10

Au

g-1

0O

ct-1

0D

ec-1

0F

eb-1

1A

pr-

11Ju

n-1

1A

ug

-11

Oct

-11

Dec

-11

Feb

-12

Ap

r-12

Jun

-12

Au

g-1

2O

ct-1

2D

ec-1

2F

eb-1

3A

pr-

13Ju

n-1

3A

ug

-13

Oct

-13

Dec

-13

Feb

-14

Ap

r-14

Jun

-14

Au

g-1

4O

ct-1

4D

ec-1

4

Conference Board Consumer Confidence Index2005 – December 2014

Source: Conference Board

-14.2%

0.9%

1.4%

2.4%

3.8%

4.8%

5.1%

5.2%

5.8%

6.1%

6.8%

8.2%

8.6%

-20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0%

Gasoline Stations

Miscellaneous Store Retailers

General Merchandise Stores

Food & Beverage Stores

Clothing & Clothing Accessories Stores

Sporting Goods, Hobby, Book & Music Stores

Internet, etc. Retailers

Building Material & Garden Supplies Dealers

Furniture & Home Furn. Stores

Health & Personal Care Stores

Electronics & Appliance Stores

Food Services & Drinking Places

Motor Vehicle & Parts Dealers

12-month % change

Sales Growth by Type of Business December 2013 v. December 2014*


*December 2014 advanced estimate

Conference Board Leading Economic Indicators IndexAugust 2007 through December 2014

Source: Conference Board

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%A

ug

-07

No

v-0

7

Feb

-08

May

-08

Au

g-0

8

No

v-0

8

Feb

-09

May

-09

Au

g-0

9

No

v-0

9

Feb

-10

May

-10

Au

g-1

0

No

v-10

Feb

-11

May

-11

Au

g-1

1

No

v-11

Feb

-12

May

-12

Au

g-1

2

No

v-12

Feb

-13

May

-13

Au

g-1

3

No

v-13

Feb

-14

May

-14

Au

g-1

4

No

v-14

On

e-m

on

th P

erc

en

t C

ha

ng

e

December 2014 = 121.1 where 2010 = 100

Tell-Tale Heart

• Economy gained momentum over the course of last year;

• Tailwinds included booming stock market, lower gasoline prices, stabilizing global economy, and consumer expenditures on interest rate sensitive durable goods like autos;

• The current year is associated with greater certainty regarding monetary policy – that helps;

• The world is not perfect - black swan threats remain: (1) Iran (2) Israel/Iran (3) Europe (4) contagion (5) cyber (6) EMP;

• Market is nervous, but perhaps for the wrong reasons (more people benefit from lower oil price than are hurt); and

• Maryland’s economy will continue to underperform, with state government cutbacks making their mark.

Thank You

Follow us on Twitter @SagePolicyGroup

You can always reach me at [email protected]

Please look for updates of information at www.sagepolicy.com.

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Please contact us when you require economic research & policy analysis.

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