hampton roads economic forecast 2016management federal government real estate, rentals, &...

2012 REGIONAL FORECAST

Hampton Roads Economic Forecast

Hampton Roads Planning District Commission James Clary Senior Economist January 21, 2016

2016

Employment Since the Great Recession

-8%

-6%

-4%

-2%

0%

2%

4%

Perc

ent J

ob L

oss R

elat

ive

to P

eak

Months Since Peak Employment

U.S. Virginia Hampton Roads

Source: Bureau of Labor Statistics, HRPDC

Hampton Roads 2016 Regional Economic Forecast 2

Hampton Roads Projected Return to Peak Employment

-60

-50

-40

-30

-20

-10

0

Empl

oym

ent D

eclin

e fr

om P

eak

Jul-2

007

(Tho

usan

ds o

f Job

s)

Job Loss Average Job Growth Best Year of Job Growth (1997)

Source: Bureau of Labor Statistics, HRPDC

Dec 2016

Dec 2018

Hampton Roads 2016 Regional Economic Forecast 3

Hampton Roads Employment Change: Nov '07 - Nov '15

ConstructionRetail Trade

Local GovernmentInformation

Wholesale TradeManufacturing

Real Estate, Rentals, & LeasingTransportation & UtilitiesAdministrative & Support

Finance & InsuranceManagement

State GovernmentEducation Services

Scientific & Technical ServicesOther Services

Federal GovernmentLeisure & Hospitality

Healthcare & Social Assistance

Change in Employment

Source: Bureau of Labor Statistics, HRPDC

Hampton Roads 2016 Regional Economic Forecast 4

Hampton Roads Employment Change: Nov '14 - Nov '15

Retail TradeTransportation & Utilities

Local GovernmentOther ServicesManufacturing

Wholesale TradeInformation

Scientific & Technical ServicesState Government

ManagementFederal Government

Real Estate, Rentals, & LeasingHealthcare & Social Assistance

Education ServicesFinance & Insurance

ConstructionAdministrative & Support

Leisure & Hospitality

Change in Employment

Source: Bureau of Labor Statistics, HRPDC

Hampton Roads 2016 Regional Economic Forecast 5

Unemployment Rate in Nov 2015 MSAs with Population between 1-3 Million

4.8%

0%

1%

2%

3%

4%

5%

6%

7%

Une

mpl

oym

ent R

ate

by M

SA

MSAs Source: Bureau of Labor Statisics, HRPDC

Hampton Roads 2016 Regional Economic Forecast 6

U.S., Virginia, & Hampton Roads Unemployment Rate

(Seasonally Adjusted)

0%

2%

4%

6%

8%

10%

12%

Une

mpl

oym

ent R

ate

U.S. Hampton Roads Virginia

Source: Bureau of Labor Statistics, HRPDC

Hampton Roads 2016 Regional Economic Forecast 7

The Real Unemployment Rate

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Sour

ce o

f Une

mpl

oym

ent

U.S. Unemployment by Type

Part-Time for Economic Reasons (U6) Marginally Attached(U5) Discouraged Workers(U4) Official Rate: Jobless and Seeking Work(U3)

Source: Bureau of Labor Statistics, HRPDC

8

Hampton Roads Retail Sales (3 Month Moving Average)

$1.2

$1.6

$2.0

Billi

ons o

f Dol

lars

(S

easo

nally

Adj

uste

d)

-12.6% +19.4%

+4.3%

Source: Virginia Department of Taxation, HRPDC

Hampton Roads 2016 Regional Economic Forecast 9

Automobile Sales

0

20

40

60

80

100

120

0

2

4

6

8

10

12

14

16

18

20

HR Autom

obile Sales (Thousands) U.S

. Aut

omob

ile S

ales

(Mill

ions

)

United States

Hampton Roads

Sources: Bureau of Economic Analysis, Virginia Automobile Dealers Association, HRPDC

Hampton Roads 2016 Regional Economic Forecast 10

Home Price Index Growth in Hampton Roads, Virginia, and the U.S.

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Year

-ove

r-Ye

ar C

hang

e Hampton Roads Virginia U.S.

Source: Federal Housing Finance Agency, HRPDC

Hampton Roads 2016 Regional Economic Forecast 11

Gasoline Prices in Hampton Roads

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

Source: AAA Fuel Gauge Report, HRPDC

$1 price drop saves the average HR household $1,300 in one year $1 price drop adds $850 million to the regional economy

$3.55 Jun ‘14

$1.74 Jan ‘16

$3.92 Apr ‘12

Hampton Roads 2015 Regional Economic Forecast 12

DoD Budget- Deals Don’t Close Gap

Hampton Roads 2016 Regional Economic Forecast 13

National Defense Expenditures

$0

$100

$200

$300

$400

$500

$600

$700

$800

Billi

ons

of D

olla

rs

OCOBase Budget

Hampton Roads 2016 Regional Economic Forecast 14

The Year Ahead…

The Good: • Federal budget adds a

degree of certainty • Growing national economy • Consumer spending is

strong • Low energy prices • Interest rates continue to

remain low • Corporate investment and

office space leasing is up

The Bad: • Federal spending continues

to be tight • Loss of local Navy personnel • Region’s housing market

remains weak • Dollar is high

– Tourism impacts – Factory activity is down

• Slow growth outside of the U.S.

Hampton Roads 2016 Regional Economic Forecast 15

Crude Oil Price Forecast

$0

$20

$40

$60

$80

$100

$120

2012 2013 2014 2015 2016 2017 2018 2019 2020

U.S

. Dol

lars

Per

Bar

rel

World Bank

IMF

EIU

OECD

Hampton Roads 2016 Regional Economic Forecast

Sources: Knoema.com, HRPDC

16

Impact of Fed Rate Hike

• Mortgage Rates • Auto Loans • Credit Cards • Saving rates • Investment Market

Hampton Roads 2016 Regional Economic Forecast 17

Annualized Percent Change in U.S. Gross Domestic Product

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

Annu

alize

d Pe

rcen

t Cha

nge

Consensus Forecast

Hampton Roads 2016 Regional Economic Forecast 18

HRPDC Forecast for 2016 2015 2016

(Year to Date) ForecastU.S.

Real GDP 2.6% 2.5%

Interest Rates

Short Government Rates 0.0% 0.7%Long Government Rates 2.1% 2.7%

Hampton Roads

Gross Product NA 1.3%

Civilian Employment 0.8% 0.8%

Unemployment Rate 4.8% 4.7%

Retail Sales 3.6% 4.1%

Auto and Truck Sales 5.2% 4.5%

Value of Single-Family Residential Building Permits 7.6% 2.3%

Hampton Roads 2016 Regional Economic Forecast 19

Discussion James Clary HRPDC Senior Economist jclary@hrpdcva.gov

Hampton Roads 2016 Regional Economic Forecast 20