The Economies of Northern Virginia and the Commonwealth

1
The Economies of Northern Virginiaand the
Commonwealth
Lead Virginia
John C. McClain, AICPSenior Fellow and Deputy
Director Center for Regional Analysis, School of
Public Policy George Mason University

July 22, 2005
2
The National Economy
3
U.S. Gross Domestic Product
4.5 3.7 0.8 1.9
3.0 4.4


3.8
1999 2000 2001 2002 2003 2004 2005
4
Productivity

4.9
4.5
4.0
23-yr Avg. 2.1
Q1 05 2.9
5
Housing TrendsNew Existing Home Sales
(000s)
(000s)
New (Rt Scale)
Existing (left scale)
6
Consumer Confidence
Peak Jul 2000
Present Situation
100
Expectations
7
Annual Rate of Change in Jobs - US
Thru Jun 2005
THOUSANDS
Feb 2.36 M
(Highest Rate since Sep 2000)
Bottom 2.03 M Feb 02
8
The Virginia Economy
9
GDP/GSP Trends

Virginia
U.S.
10
Virginia Annual Job Change 1980 - 2004
86,900
0
- 14
- 22
- 67
Year
11
Virginia and Selected StatesJob Change May 04
May 05
Thousands
Not Seasonally Adjusted
12
Virginia and Selected StatesJob Change May 04
May 05
Percent
Not Seasonally Adjusted
13
Virginia and Selected States Ranked by
Unemployment Rate May 2005
Percentage
U.S. 4.9
Not Seasonally Adjusted
14
1999 - 2004 Job Change By Sector - Virginia
(000s)
Total 172,000
(Ranked by Size of Sector)
15
May 04 May 05 Job Change By Sector - Virginia
(000s)
Total 51,000
(Ranked by Size of Sector)
16
The Importance of Federal Spending to the
Virginia Economy
17
Total Federal Spending in Virginia
Billions Current
02-03 Change 7.9B, 9.6
Average Annual Increase 6.5 Total into VA
Economy 768 Bil.
18
Federal Spending by Type Virginia
Billions Current
Procurement
Retirement
Wages
All Other
19
Total Federal Spending in Virginia by Area
Billions Current
No. Virginia
Rest of State
Hampton Rds
20
Federal Procurement in Virginia
Billions Current
Total
No. Virginia
Hampton
Rest of State
21
The Northern Virginia Economy
22
Northern Virginia Jurisdictions
23
Washington Metro Annual Job Change 1980 - 2005
79,900
Year
Annual average based on first 5 months
24
Metro Comparisons Job Change Last Five Years15
Largest Metro Areas
WASHINGTON
No. Virginia
Thousands
Annual Data
25
15 Largest Job MarketsJob Change May 2004 May
2005
Thousands
Washington 79,100
No. Virginia 49,100
26
15 Largest Job MarketsRanked by Unemployment
RateMarch 2005

U.S. 5.4
3.6
2.4
No. Virginia
Washington MSA
Data not seasonally adjusted
27
Share of Washington Area Jobs 1970-2005
No. Virginia
of Regional Jobs
Sub MD
District
Year
28
Northern Virginias Share of Virginia Jobs
1990-2005
of Virginia Jobs
Year
29
1999 - 2004 Job Change By Sector Northern
Virginia (000s)
Total 144,200
(Ranked by Size of Sector)
30
May 04 May 05 Job Change By Sector No VA
(000s)
Total 49,100
(Ranked by Size of Sector)
31
The Importance of Federal Spending to the
Northern Virginia Economy
32
Total Federal Spending Washington Metro Area
Billions
2004 107.4 B
33
Federal Spending by Type1983 - 2003
Billions Current
Procurement
Wages Salaries
All Other
34
Annual Change in Federal Procurement
Spending Washington Metro Area
Billions
2004 7.8B
6.1
35
2003-2004 Federal Procurement Spending by
Sub-state Area( in Billions)
Billions
03 04
16.3 19.1 19.1
36
Federal Procurement and Jobs( 1 billion 7,000
jobs)

• In FY 2004, Federal Procurement in Northern
  Virginia was 26.4 Billion which translates into
  185,000 jobs
• Growth from FY 2003 to FY 2004 was 4.24 Billion
  growth of 30,000 jobs

37
The Outlook for 2005
38
GDP/GSP/GRP Outlook

No. Virginia
Virginia
U.S.
39
Job Change in VirginiaAnd Northern Virginia
40
Wild Cards / Threatsto Northern Virginia Economy

• National Economic Slowdown
• Terrorism
• Transportation Infrastructure
• Workforce
• Housing Affordability
• BRAC

41
What is Happening in the Housing Market?

• Nationally Low mortgage interest rates
• Job growth creates demand
• Housing supply constrained by collective planning
  and zoning policies of the local governments

42
Housing Price IndexVirginia4th Quarter Each Year
1995 Q1100
1997-2004 77.8
1990-1997 11.8
Source Office of Federal Housing Enterprise
Oversight, GMU Center for Regional Analysis
43
Housing Price IndexAnnual ChangeVirginia4th
Quarter Each Year
1995 Q1100
27-Yr Average (compound rate) 5.89
Source Federal Office of Housing Enterprise
Oversight, GMU Center for Regional Analysis
44
Average Sales PriceExisting HousesNorthern
Virginia
125 Since 98
Thousands
17.6
21.3
13.9
13.4
11.9
3.8
5.1
Source MRIS, GMU Center for Regional Analysis
2005 Jan-Jun
45
of Houses Sold by Price Range1999 vs.
2004Northern Virginia
All Units
Percent
Source MRIS, GMU Center for Regional Analysis
46
Average Days on MarketExisting HousesWashington
MSA No Virginia
Days
102
Wash Metro
27
Northern Virginia
Source MRIS, GMU Center for Regional Analysis
47
2005 Base Realignment and Closure Commission
Recommendations

• Job Losses in Arlington, Alexandria and Fairfax
  leased space/DOD Security Regs
• Potential Employee Relocations
• Redevelopment
• Longer-termdecentralization?

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