U.S. and Virginia Economic Update - Richmond Fed · 2018-05-11 · U.S. and Virginia Economic...

U.S. and Virginia Economic Update

Virginia Association of Economists Annual MeetingApril 5, 2018

Ann MacherasGroup Vice President

Overview

• National Economic Trends• Gross Domestic Output• Labor Markets• Inflation

• Virginia Economic Trends• Business Activity – Manufacturing and Services• Labor Market • Industry Trends• Metropolitan Areas

National Economic Trends

-10

-8

-6

-4

-2

0

2

4

6

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

% Change, SAAR

U.S. Real Gross Domestic Product

4Source: Bureau of Economic Analysis via Haver Analytics and Federal Reserve Board

Note: Projected GDP is the range from the March 2018 Summary of Economic Projections. Projections of change in real gross domestic product (GDP) are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

Q4: 2017US: 2.9%

-800

-700

-600

-500

-400

-300

-200

-100

0

100

200

300

400

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Average Monthly Change, Thous.

Employment Growth

Source: Bureau of Labor Statistics/Haver Analytics

Monthly ChangeFebruary: 313January: 239

December: 175

5

Unemployment Rate

Source: Bureau of Labor Statistics/Haver Analytics

0

1

2

3

4

5

6

7

8

9

10

11

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Percent

February 2018US: 4.1%

6

Note: Projected unemployment rates are the range from the March 2018 Summary of Economic Projections. Projections of the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

Labor Force Participation

7

52

54

56

58

60

62

64

66

68

70

72

1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013 2018

Total Civilian Labor Force Age 16-24Percent of Population

Source: Bureau of Labor Statistics/Haver Analytics

-3

-2

-1

0

1

2

3

4

5

6

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

YoY % Change All ItemsCore CPI

Consumer Price Index

Source: Bureau of Labor Statistics/Haver Analytics

February 2018All Items: 2.2Core CPI: 1.8

8

Virginia Economic Trends

25

30

35

40

45

50

55

60

65

70

75

-50

-40

-30

-20

-10

0

10

20

30

40

50

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Index, 3-Month Average

Richmond Manufacturing Survey

Philadelphia Fed Business Outlook

Empire State Manufacturing

ISM Manufacturing (Right Axis)

Surveys of Business Activity: Manufacturing

10

(Current Index) Richmond Empire State Philadelphia ISMMarch 15 22.5 22.3 59.3

February 28 13.1 25.8 60.8January 14 17.7 22.2 59.1

Source: The Federal Reserve Banks of Richmond, New York, and Philadelphia; and Institute of Supply Managers

Surveys of Nonmanufacturing Activity

Source: The Federal Reserve Bank of Richmond, Institute of Supply Managers

30

35

40

45

50

55

60

65

70

-40

-30

-20

-10

0

10

20

30

40

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

3-m

onth

ave

rage

Services Revenue Index (Left Axis)

ISM Nonmanufacturing (Right Axis)

Richmond Service Sector Survey and ISM Nonmanufacturing Survey

11

State Employment Growth

12Source: Bureau of Labor Statistics/Haver Analytics

Virginia Payroll Employment

Source: Bureau of Labor Statistics/Haver Analytics

13

-6

-5

-4

-3

-2

-1

0

1

2

3

4

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

YoY % Chg (SA) U.S.Virginia

February 2018US: 1.6%VA: 0.9%

Dec 2015Feb 2014

MSA Payroll Employment Growth in VirginiaPercent Change in Employment from a Year Ago

Source: Bureau of Labor Statistics/Haver Analytics

3.2

3.0

2.0

1.6

1.2

0.9

0.9

0.7

0.0

-0.4

-0.7

-1 0 1 2 3 4

Charlottesville

Winchester

Northern Virginia

US

Lynchburg

Virginia

Harrisonburg

Richmond

Virginia Beach

Roanoke

Blacksburg

YoY% Change (SA)

February 2018

14

Contribution to Employment Growth by Area

15

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Feb 2014 Dec 2015 Feb 2018

PercentContribution to Total Employment Growth

(percent change from year ago)

Northern Virginia

Richmond MSA

Virginia Beach MSA (VAportion)

Other Metro/Micro (VAportion)

Non-metro

Source: Bureau of Labor Statistics/Haver Analytics

Virginia Industry Structure

16

0.5

4.7

8.5

18.8

1.9

5.8

14.0

15.8

10.9

3.9

15.2

0.2

4.9

5.9

16.8

1.7

5.2

18.4

13.4

10.2

5.1

18.1

0 2 4 6 8 10 12 14 16 18 20

Natural Resources & Mining

Construction

Manufacturing

Trade, Transportation & Utilities

Information

Financial Activities

Professional & Business Services

Education & Health Services

Leisure & Hospitality

Other Services

Government

Employment Share (Percent)

2017 U.S.Virginia

Source: Bureau of Labor Statistics/Haver Analytics

Virginia Industry Growth

Source: Bureau of Labor Statistics/Haver Analytics

1.6

8.8

4.2

1.8

0.9

-2.4

1.7

2.4

1.9

2.1

1.7

0.2

1.1

2.5

4.5

2.8

0.6

-2.3

1.1

2.0

1.1

-0.1

2.5

0.0

-4 -2 0 2 4 6 8 10

Total

Natural Resources & Mining

Construction

Manufacturing

Trade, Transportation & Utilities

Information

Financial Activities

Professional & Business Services

Education & Health Services

Leisure & Hospitality

Other Services

Government

YoY % Chg (NSA)

February 2018 U.S.Virginia

17

0.22

0.16

0.11

-0.04

0.06

0.36

0.15

-0.01

0.130.01

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Feb 2018

PercentContribution to Virginia Employment Growth

Mining & Logging

Construction

Manufacturing

Trade, Transportation,& UtilitiesInformation

Financial Activities

Professional &business servicesEducation & healthservicesLeisure & hospitality

Other services

Government

Contribution to Employment Growth by Industry

18

Source: Bureau of Labor Statistics/Haver Analytics

Contribution to Employment Growth by Industry

19

Source: Bureau of Labor Statistics/Haver Analytics

0.220.220.160.060.110.35

-0.04-0.02

0.060.10 0.36

0.780.15

0.60

-0.01

0.55

0.13

0.090.06

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Feb 2018Dec 2015

Percent Contribution to Virginia Employment GrowthMining & Logging

Construction

Manufacturing

Trade, Transportation, &UtilitiesInformation

Financial Activities

Professional & businessservicesEducation & healthservicesLeisure & hospitality

Other services

Government

Contribution to Employment Growth by Industry

20

-0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0

Mining & Logging

Construction

Manufacturing

Trade, Transportation, & Utilities

Information

Financial Activities

Professional & business services

Education & health services

Leisure & hospitality

Other services

Government

Percentage Points

Contribution to Virginia Employment Growth

Feb 2018

Dec 2015

Feb 2014

Source: Bureau of Labor Statistics/Haver Analytics

State Unemployment Rates

21Source: Bureau of Labor Statistics/Haver Analytics

Virginia Unemployment Rate

Source: Bureau of Labor Statistics/Haver Analytics

0

1

2

3

4

5

6

7

8

9

10

11

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Percent U.S.Virginia

February 2018US: 4.1%VA: 3.5%

22

Unemployment Rate – VA Metro Areas

23

4.2

3.4

5.3

3.7

4.2

3.2

3.93.7

4.2

3.43.2 3.0

4.8

3.2

3.7

2.7

3.3 3.23.5

3.1

0

1

2

3

4

5

6Percent Unemployment Trends February 2017

February 2018

Source: Bureau of Labor Statistics/Haver Analytics

Summary

• Economic conditions nationally continue on moderate growth path

• Hiring activity and other labor market indicators are consistent with modest growth

• Pace of Virginia’s employment growth has been lagging that of the U.S.:– The large metro areas that have driven growth in the past

are not contributing as strongly now– Industry sectors that traditionally generate the most jobs,

not growing as robustly – PBS, EHS and other sectors• Virginia’s unemployment rate remains low, but the

gap relative to the U.S. has closed some

24

The views expressed here are those of the author, and do not necessarily represent those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

25