The Washington Region’s Demographics and Economy: Current Trends and Outlook

Jeannette Chapman Deputy Director and Senior Research Associate

Stephen S. Fuller Institute Schar School of Policy and Government

George Mason University

February 1, 2018

IREM 2018 Industry Forecast & Trade Show

Population Trends in the Washington

Region

1. The Washington Region is Aging.

-

100,000

200,000

300,000

400,000

500,000

< 5 5 - 9 10 -14

15 -19

20 -24

25 -29

30 -34

35 -39

40 -44

45 -49

50 -54

55 -59

60 -64

65 -69

70 -74

75+

Baby Boomers: 1.29M

Population by Age Group Washington Region, 1980

Sources: U.S. Census Bureau (1980 Census); The Stephen S. Fuller Institute at the Schar School, GMU

-

100,000

200,000

300,000

400,000

500,000

< 5 5 - 9 10 -14

15 -19

20 -24

25 -29

30 -34

35 -39

40 -44

45 -49

50 -54

55 -59

60 -64

65 -69

70 -74

75 -79

80 -84

85+

Baby Boomers: 1.57M Millennials:

581K

Population by Age Group Washington Region, 1990

Sources: U.S. Census Bureau (1990 Census); The Stephen S. Fuller Institute at the Schar School, GMU

-

100,000

200,000

300,000

400,000

500,000

< 5 5 - 9 10 -14

15 -19

20 -24

25 -29

30 -34

35 -39

40 -44

45 -49

50 -54

55 -59

60 -64

65 -69

70 -74

75 -79

80 -84

85+

Population by Age Group Washington Region, 2010

Sources: U.S. Census Bureau (2010 Census); The Stephen S. Fuller Institute at the Schar School, GMU

Baby Boomers: 1.50M

Millennials: 1.56M

0

100,000

200,000

300,000

400,000

500,000

< 5 5 - 9 10 -14

15 -19

20 -24

25 -29

30 -34

35 -39

40 -44

45 -49

50 -54

55 -59

60 -64

65 -69

70 -74

75 -79

80 -84

85+

Population by Age Group Washington Region, 2015

Sources: U.S. Census Bureau (v2016 Population Estimates); The Stephen S. Fuller Institute at the Schar School, GMU

Baby Boomers: 1.43M

Millennials: 1.70M

2. The Region Attracted Millennials But May Not Be Able to Keep Them.

6.9%

5.6% 4.9% 4.7% 4.4% 4.3% 3.9% 3.8%

3.1% 2.6%

2.3% 1.7% 0.6%

-0.7% -0.7% -2.0%-1.0%0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%

U.S. Increase = 2.8%

Percent Change in Population Aged 25-34 15 Largest Metros, 2014 - 2016

Sources: U.S. Census Bureau (v2016 Population Estimates); The Stephen S. Fuller Institute at the Schar School, GMU

- 5,000

10,000 15,000 20,000 25,000 30,000 35,000 40,000

<5 5-9 10-14 15 -19

20 -24

25 -29

30 -34

35 -39

40 -44

45 -49

50 -54

55 -59

60 -64

65 -69

70 -74

75 -79

80 -84

85+

In-Migrant Out-Migrant

Domestic Migration by Age Group Washington Region, 2013-2015 Average

Sources: 2013, 2014, 2015 ACS Microdata (Average); The Stephen S. Fuller Institute at the Schar School, GMU

3. Population Growth is Slowing.

(60.0)

(40.0)

(20.0)

-

20.0

40.0

60.0

80.0

100.0

120.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Net DomesticMigration

Net InternationalMigration

Natural Increase

Total

Population Growth By Component Change Washington Region (in 000s)

Sources: U.S. Census Bureau (Intercensal, v2009 and v2016 Population Estimates); The Stephen S. Fuller Institute at the Schar School, GMU

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Population Growth Washington Region, 2001-2021

Sources: IHS Economics; The Stephen S. Fuller Institute at the Schar School, GMU

Forecast

200,100

92,700

27,900 27,200

0

50,000

100,000

150,000

200,000

Head of OwnHousehold

Livingw/Spouse/Partner

Living w/ Relative(s) Living w/Roommate(s)

25-34 Year Olds Earning $60,000+ Greater Washington Region, 2015

Sources: U.S. Census Bureau (2015 ACS Microdata); The Stephen S. Fuller Institute at the Schar School, GMU

15.8% of 25-34 Year Olds Earning $60,000 are not in

their own household

Economic Trends in the Washington Region

1. Strong Job Growth Characterized by Weak Office-Using, High-Value Job Growth

117.2

41.3

8.9

55.1 70.5 64.5

52.0

24.7 13.4

-50.4

11.4

43.4 39.9 28.1 18.6

57.7 55.6 56.6

(60.0) (40.0) (20.0)

- 20.0 40.0 60.0 80.0

100.0 120.0 140.0

2000-2017 Avg: +39,360

Job Change in the Washington Region 2000 – 2017 (in thousands)

Sources: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), The Stephen S. Fuller Institute at the Schar School, GMU

55,100 56,530

32,450

15,620

-

10,000

20,000

30,000

40,000

50,000

60,000

2003 2017*

All Jobs Office-Using Jobs

Private Sector, Traditional Office-Using Job Change Washington Region, 2003 and 2017

Sources: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), The Stephen S. Fuller Institute at the Schar School, GMU

~ 6.5M SF

~ 3.2M SF

-0.1 -0.2

2.1 -2.6

2.5 0.7

2.3 4.1

13.1 5.7

-0.4 13.0

16.3

-30 -20 -10 0 10 20 30

ManufacturingWholesale Trade

Transportation & UtilitiesInformation

ConstructionFinancial Activities

Other ServicesRetail Trade

Leisure & HospitalityState & Local Govt

Federal GovtEdu.& Health Services

Prof. & Business Services

Washington MSA Job Change by Sector 2016 – 2017

Ranked by Size in 2016 (000s) Total = 56,500

Sources: U.S. Bureau of Labor Statistics (Seasonally Adjusted), The Stephen S. Fuller Institute at the Schar School, GMU

2. The Washington Region Remains Overly Dependent on the Federal Government.

2017 Structure of the Washington Region Economy

Local Serving Activities

38.0%

Non-Local Serving

Business 15.2%

Other Federal

8.9% Fed Wages &

Salaries 7.5%

Procurement 13.5%

Total Federal 29.9%

Source: The Stephen S. Fuller Institute at the Schar School, GMU

-3-2-10123456

Washington

U.S.

U.S. GDP and Washington MSA GRP 2007 – 2016 (Annual % Change)

(%)

Sources: U.S. Bureau of Economic Analysis, IHS Markit, The Stephen S. Fuller Institute at the Schar School, GMU Forecast as of January 2018

U.S. Recession Sequestration

1.4%

-0.8%

2.3%

-1.2%

1.4%

3.3%

8.0%

1.5%

3.4%

0.9%

3.7%

-0.8%

0.9%

2.6%

6.4%

2.5%

-2%

0%

2%

4%

6%

8%

10%

Info. Comm.Tech.

Science &Security Tech.

BusinessServices

Media & Info. Advocacy Business &Leisure Travel

Bio. & HealthTech.

All Clusters

Washington U.S.

Underperforming the Nation Outperforming the Nation

Growth Rates of the Washington Region’s Advanced Industrial Clusters

June 2014 to June 2017, Annualized Growth

Sources: U.S. Bureau of Labor Statistics (QCEW), The Stephen S. Fuller Institute at the Schar School, GMU

3. The Washington region’s high cost of living and quality of life issues have made it less

competitive with its peers.

-19.3% -18.9% -18.4% -16.0% -15.3% -14.0%

-12.2% -10.7% -10.3%

-8.1% -7.4%

-1.3%

2.4% 2.4%

-16.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

Percent Difference in Price Level Compared to the Washington Region, 2015

Sources: U.S. Bureau of Economic Analysis; The Stephen S. Fuller Institute at the Schar School, GMU

50.2% 48.5% 46.9% 42.0% 40.5% 39.0% 37.7% 37.2% 36.7% 33.9% 33.5% 32.0% 30.8% 30.5% 30.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Percent of Residents with a Bachelor’s Degree or Higher, 2016

Sources: U.S. Census (2016 1-Year ACS); The Stephen S. Fuller Institute at the Schar School, GMU

The Economic Outlook

24.7 13.4

-50.4

11.4

43.4 39.9 28.1

18.6

57.7 55.6 56.5 47.4

38.2 31.8 27.4

(60.0)

(40.0)

(20.0)

-

20.0

40.0

60.0

Job Change in the Washington Region 2007 – 2017 – 2022 (in thousands)

Sources: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), IHS Markit, The Stephen S. Fuller Institute at the Schar School, GMU *Preliminary

Forecast>>>

10.9 4.0

-19.3

1.5

15.7 15.3

3.8 1.4

19.5 21.9 15.6

25.3 27.1 23.0

19.0

(30.0)

(20.0)

(10.0)

-

10.0

20.0

30.0

40.0

Private Sector, Traditional Office-Using Job Change Washington Region 2007 – 2017 – 2022 (in thousands)

Sources: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), IHS Markit, The Stephen S. Fuller Institute at the Schar School, GMU *Preliminary

Forecast>>>

1. FY 2018 Federal Budget

2. Federal Shutdowns

3. The Next Nestle, Discovery, Amazon, Apple

4. The National/International Business Cycle

5. Unknown Unknowns?

Wildcards in 2018

Thank You

For monthly reports on the Washington region’s economic performance go to

sfullerinstitute.gmu.edu

@FullerInstitute