Old Dominion University 2016 Regional Economic Forecast. Strome College of Business

Size: px

Start display at page:

Download "Old Dominion University 2016 Regional Economic Forecast. Strome College of Business"

Joleen Nicholson
6 years ago
Views:

1 Old Dominion University 2016 Regional Economic Forecast January 27, 2016 Professor Vinod Agarwal Director, Economic Forecasting Project Strome College of Business 1

2 Presentation outline I Economic Performance a) Regional and National Economies b) Defense c) Civilian Nonfarm Jobs d) Residential Market in Hampton Roads e) Taxable Sales and Hotel Revenue f) Port and Cargo II. Forecast for

3 Old Dominion University 2015 Hampton Roads Scorecard Actual Change 2015 Predicted Change 2015 Real Gross Regional Product* N/A +1.96% (1.10) Source: Bureau of Economic Analysis and the Old Dominion University Economic Forecasting Project. * Base year is

4 Growth Rate Rate of Growth of GDP (U.S.) and GRP (Hampton Roads): U.S Hampton Roads e Percent change real GDP Percent change real GRP Source: Bureau of Economic Analysis and the Old Dominion University Economic Forecasting Project. Data on GDP incorporates latest BEA revisions in September Real GRP for Hampton Roads is calculated by using the GDP price deflator. e represents estimated value

5 Hampton Road s Gross Regional Product Attributable to DOD Spending % 49.5% 48.8% 40% 30% 33.5% 44.4% 39.2% 37.6% 20% 10% 0% Source: U.S. Department of Defense, U.S. Department of Commerce, and the Old Dominion University Economic Forecasting Project. e represents estimated value ; f represents forecasted value 5

6 Billions of dollars Caps on Department of Defense Discretionary Spending, FY 2012 to FY The legislated cap on spending increased by only $0.8B (0.15%) for FY 2015 and is now expected to increase by $26.8B (5.14%) during FY 2016 and by only $3.0 B (0.55%) during FY No Sequestration Sequestration 450 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 BCA 2011 Sequestration BBA 2013 BA 2015 Source: BCA 2011, Budget Requests for FY14, CBO Sequestration Update Report, BA 2015, and the Old Dominion University Economic Forecasting Project. 6

7 Billions of $ Estimated Direct DOD Spending in Hampton Roads 2000 to Between 2000 and 2012, DOD spending in our region increased by an average of 5.65% annually. In 2016, it will be about 2.8% lower than its peak in Source: U.S. Department of Defense and the Old Dominion University Economic Forecasting Project. *Includes Federal Civilian and Military Personnel and Procurement 7

8 $ Thousands Average Military Compensation Hampton Roads: 2001 to Average Military Compensation for the first time since 1969 declined in 2013 by 3.0%; It increased by 1.5% in $92.9 $ $ Source: Bureau of Economic Analysis and the Old Dominion University Economic Forecasting Project. 8

9 Estimated Average Compensation (Wages, Salaries and Fringe Benefits) Selected Categories Hampton Roads: 2013 and 2014 Earnings in 2013 Earnings in 2014 Percent Change 2013 to 2014 Military $90,115 $91, % Federal Civilian Govt. Employees State and Local Govt. Employees $97,800 $102, % $56,933 $58, % Private Nonfarm $40,262 $41, % Source: U.S. Bureau of Economic Analysis (BEA) and the Old Dominion University Economic Forecasting Project. BEA refers to compensation as earnings. 9

10 Growth(CAGR) in Estimated Average Compensation (Wages, Salaries and Fringe Benefits) Selected Categories Hampton Roads: 2001, 2013, and 2014 Compound Annual Growth Rate 2001 to 2010 Compound Annual Growth Rate 2010 to 2014 Percent change 2013 to 2014 Military 7.2% 1.0% 1.5% Federal Civilian Govt. Employees State and Local Govt. Employees 4.5% 2.1% 5.1% 3.6% 1.3% 2.4% Private Nonfarm 2.9% 2.0% 2.3% Source: U.S. Bureau of Economic Analysis (BEA) and the Old Dominion University Economic Forecasting Project. BEA refers to compensation as earnings. 10

11 Old Dominion University 2015 Hampton Roads Scorecard Actual Change 2015* Predicted Change 2015 Civilian Employment** Unemployment Rate** 0.86% +0.90% 5.07% 4.90% Source: Old Dominion University Economic Forecasting Project. Figures for calendar year 2015 include predicted values for December **Employment data for 2014 and 2015 will be revised by U.S. BLS in March /April

12 Decline from Pre-Recession Peak The Recession Including Virginia and Hampton Roads % Decline in Total US Non-farm Payroll Employment from Pre-Recession Peak 6% 4% 2% 0% -2% -4% Month After Pre-Recession Peak Pre-Recession Peak Dates: U.S.: January, 2008 Virginia: April, 2008 Hampton Roads: July, % 1.80% -2.32% -6% -8% USA VA HR

Thousands New Civilian Jobs Gained/Lost in Selected MSA s, Virginia, and North Carolina 2007* to 2015 120 100 80 60 40 20 0-20 -40-15.3 79.9 14.3 7.8 52.3 12.7 76.5 45.2 108.5 Source: U.S. Department of Labor CES seasonally unadjusted data and the Old Dominion University Economic Forecasting Project.

13 Thousands New Civilian Jobs Gained/Lost in Selected MSA s, Virginia, and North Carolina 2007* to Source: U.S. Department of Labor CES seasonally unadjusted data and the Old Dominion University Economic Forecasting Project. * Peak employment in Raleigh, Durham, Northern Virginia, and Virginia occurred in Change for these areas is shown for 2008 through 13

14 1/1/2000 9/1/2000 5/1/2001 1/1/2002 9/1/2002 5/1/2003 1/1/2004 9/1/2004 5/1/2005 1/1/2006 9/1/2006 5/1/2007 1/1/2008 9/1/2008 5/1/2009 1/1/2010 9/1/2010 5/1/2011 1/1/2012 9/1/2012 5/1/2013 1/1/2014 9/1/2014 5/1/2015 Unemployment Rate in U.S., Virginia, and Hampton Roads Recession US Virginia Hampton Roads Source: Bureau of Labor Statistics

15 In thousands Annual Civilian Employment (Jobs) in Hampton Roads: 1999 to The HR economy added only 1,100 jobs in At the end of 2015, even with 6,400 jobs created in 2015, we will still be about 15,000 jobs below our pre- recession level Source: U.S. Department of Labor CES data and the Old Dominion University Economic Forecasting Project. Not seasonally adjusted.

16 Change in Employment by Sectors (Private Ownership) in Hampton Roads From 1 st Quarter 2007 to 1 st Quarter 2015 (Virginia Portion of Hampton Roads) -25,819-13,124 Health Care and Social Assistance Professional, Scientific, and Technical Servi Management of Companies and Enterprises Accommodation and Food Services Educational Services 1,060 15,863 Agriculture, Forestry, Fishing and Hunting Arts, Entertainment, and Recreation Transportation and Warehousing Utilities Finance and Insurance Administrative and Support and Waste Mgmt Real Estate and Rental and Leasing Wholesale Trade Manufacturing Information Retail Trade Construction Total, All Industries -28,000-23,000-18,000-13,000-8,000-3,000 2,000 7,000 12,000 17,000 Source: Virginia Employment Commission: Covered Employment and Wages by Private Ownership and the Old Dominion University Economic Forecasting Project.

17 Performance of Residential Housing Market During

18 e Millions of $ Value of Building Permits for One Unit Family Homes in Hampton Roads: Value of permits increased by 8.0% in 2015; Our forecast was an increase of 3.2%. It is 37% below its peak in , Source: U.S. Bureau of the Census and the Old Dominion University Economic Forecasting Project 19

19 Number of Existing and New Construction Homes Sold in HR Year Existing Homes Sold New Construction Homes Sold Percent New Construction ,869 4, % ,421 4, % ,548 4, % ,755 4, % ,405 4, % ,154 3, % ,046 3, % ,851 2, % ,703 2, % ,818 2, % ,856 2, % ,791 2, % ,700 2, % ,595 2, % Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information Deemed Reliable But not Guaranteed. Figures reported here represent only those properties that are listed through REIN by REIN members and may not represent all new construction activity in our region. 20

20 Median Sale Price of Existing Residential Homes in HR Year Median Price Percent change year to year 2002 $116, % 2003 $130, % 2004 $156, % 2005 $192, % 90% increase from $214, % 2007 $223, % 2008 $219, % 2009 $207, % 19% decrease From $203, % 2011 $180, % 2012 $185, % 2013 $190, % 2014 $193, % 2015 $203, % Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information deemed reliable but not guaranteed. 21

21 Estimated Inventory of Existing Residential Homes as Measured by Active Listings In HR: 2007, 2010, and ,000 14,000 12,000 10,000 8,000 6,000 Average ( Jan through December 2015) = 7,914 4,000 2,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Real Estate Information Network Inc. and the Old Dominion University Economic Forecasting Project. Information deemed reliable but not guaranteed. 22

22 Estimated Months of Supply of All Existing Homes in Hampton Roads Based on Average Sales in the Last 12 Months: January 1996 December December 2015: 5.00 Peak: (November 2010) Average (Jan December 2015) = 5.64 months 2 0 Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information deemed reliable but not guaranteed. 23

23 Existing Residential Homes Sold and Average Days on the Market Hampton Roads: , ,000 20,000 15,000 17, ,924 19,869 21, ,548 24,755 22, , , ,851 14, , ,791 16,856 20,595 18, , , Homes Sold Average Days on Market 0 Source: Real Estate Information Network Inc. and the Old Dominion University Economic Forecasting Project. Information deemed reliable but not guaranteed. Days on Market is calculated from the date listed to the date under contract date for existing homes sold. 24

24 Summary on Existing Homes Market since 2011 Inventories have decreased substantially. Days on market have also decreased. Number of homes sold has increased. Estimated months of supply have declined substantially. But the median price of homes has increased only slightly The explanation lies in distressed market short sales and bank-owned homes (REOs). 25

25 Number of Existing Short Sale and REOs Residential Homes Sold Hampton Roads: Year All Sales Short Sales Percent Short Sales REO Sales Percent REO Sales ,405 3 <1% 56 <1% , <1% , , , , , ,817 1, , ,856 1, , ,791 1, , ,700 1, , ,592 1, , Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information Deemed Reliable But not Guaranteed. 26

26 Old Dominion University 2015 Hampton Roads Scorecard Actual Change 2015* Predicted Change 2015 Taxable Sales +3.46% +3.80% Hotel Revenue +6.46% +4.90% Source: Virginia Department of Taxation, Smith Travel Research and the Old Dominion University Economic Forecasting Project. *Figures for calendar year 2015 include predicted values for December

27 e $ Billions Taxable Sales, Hampton Roads: 1996 to Taxable sales increased by 2.9% during 2014 and an estimated 3.5% during Source: Virginia Department of taxation and the Old Dominion University Economic Forecasting Project. *Figures for calendar year 2015 include predicted values for December

28 The Performance of the Hotel Industry in Hampton Roads during

29 Hotel Revenue in Hampton Roads Hotel Revenue in 2015 exceeded their previous peak observed in Revenue grew by 5.4 % and 6.5 % during 2014 and 2015 respectively Millions of $ e Source: Smith Travel Research Trend Report, January 4, 2016 and the Old Dominion University Economic Forecasting Project. 30

30 Percent Change in Hotel Revenue and REVPAR 2014 to % 12% REVENUE REVPAR 10% 8% 6% 7.4% 7.3% 6.3% 7.4% 7.4% 6.4% 4% 2% 0% USA Virginia Hampton Roads Source: Smith Travel Research Trend Report January 4, 2016 and the Old Dominion University Economic Forecasting Project. 31

31 Percent Change in Hotel Revenue within Hampton Roads: 2014 to % 9.00% 8.00% 7.00% 9.0% 8.2% 6.5% 7.9% 6.00% 5.00% 4.00% 4.1% 5.0% 3.00% 2.00% 1.00% 0.00% Wmsbg VaBch Nrfk Ports Nnews Hmpt Ches Suff HR Source: Smith Travel Research Trend Report January 4, 2016 and the Old Dominion University Economic Forecasting Project. 32

REVPAR in Selected Markets 2007 Percentage Change USA $65.55 $78.67 +20.0% Virginia $61.91 $64.03 +3.4% Hampton Roads $52.93 $53.88 +1.8% Virginia Beach $64.62 $71.80 +11.1% Williamsburg $47.47 $48.

32 REVPAR in Selected Markets 2007 Percentage Change USA $65.55 $ % Virginia $61.91 $ % Hampton Roads $52.93 $ % Virginia Beach $64.62 $ % Williamsburg $47.47 $ % Newport News/Hampton $41.49 $ % Norfolk/Portsmouth $54.05 $ % Chesapeake/Suffolk $52.90 $ % Source: Smith Travel Research Trend Report January 4, 2016 and the Old Dominion University Economic Forecasting Project 33

33 Performance of the Port 34

34 Operating Income/Loss for the Port of Virginia (In Million $): 2014 and 2015 Time Operating Income/Loss (Millions $) Fiscal Year $16.89 Fiscal Year $13.61 January through September $1.70 January through September 2015 $12.37 Source: Virginia Port Authority Comprehensive Annual Financial Report for Fiscal year 2015 and the Old Dominion University Economic Forecasting Project. 35

35 Thousands Twenty-Foot Equivalent Container Units (TEUs) at the Port of Hampton Roads 1991 to 2015 TEUs increased by 6.5% in 2015; we had forecasted a 4.4% increase. Loaded TEUs increased by only 1.2%, but empty TEUs increased by 37.7%. 3,000 2,500 2,000 1,500 1, , , Source: Virginia Port Authority and Old Dominion University Economic Forecasting Project. 36

36 Millions of Tons General Cargo Tonnage at the Port of Hampton Roads: 1991 to 2015 General Cargo Tonnage increased by 4.8% in 2015; we forecasted a 2.9% increase Source: Virginia Port Authority and Old Dominion University Economic Forecasting Project. 37

37 Millions of Containers Movement of Containers at the Port of Hampton Roads by Type of Transportation: 2011 to Rail Barge & Truck TOTAL Percent of containers moved by rail has gradually increased from 31.9% in 2012 to 32.8% in Source: Virginia Port Authority and the Old Dominion University Economic Forecasting Project 38

38 Number of TEUs Average TEUs per Container Vessel Call 2011 to ,600 1,400 1,200 1, ,307 1,341 1,410 1,158 1, Average TEUs per Container Vessel Call continues to increase; It increased by 8.9% in 2013, 2.6 % in 2014, and 5.2% in Source: Virginia Port Authority and the Old Dominion University Economic Forecasting Project 39

39 Forecast for

40 Old Dominion University 2016 Forecast for Hampton Roads MSA 2015* 2016 % Change Nominal Gross Regional Product $93.07B $97.63B Real Gross Regional Product** $84.38B $85.72B +1.59% Civilian Employment 759, , % Unemployment Rate 5.07 % 4.30% Taxable Sales $21.70B $22.48B +3.60% Hotel Revenue $746.36M $777.71M +4.20% General Cargo Tonnage 19.98M 20.52M +2.70% Housing Permit Value $835.81M $864.22M +3.40% *Figures for calendar year 2015 include predicted values for Dec ** Base year is

41 2016 Regional Summary Look for regional economic growth to be below its half-century annual average of 3.1 percent and also below that of the nation. The port, health-care industries, and tourism are likely to help the region s moderate economic expansion in 2016 Single-family home prices in 2016 are likely to continue to increase at a moderate pace. Inventories, sale volume, and days-on-market are all moving in the right direction. Months of supply of existing homes are lower than their historic average. Lingering distressed home volume remains a concern 42

Old Dominion University 2017 Regional Economic Forecast. Strome College of Business

Old Dominion University 2017 Regional Economic Forecast January 25, 2017 Professor Vinod Agarwal Director, Economic Forecasting Project Strome College of Business www.odu.edu/forecasting The views expressed