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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