National and Regional Economic Outlook
Virginia, Maryland and Delaware Association of Electric Cooperatives FAMIS ConferenceSeptember 26, 2017
Ann MacherasGroup Vice President
Overview
The National Economy• Measures of output• Labor markets• Residential investment• Business investment
The Economies of Virginia, Maryland, and Delaware
• Business activity• Labor markets • Housing markets
2
National Economic Trends
3
-10
-8
-6
-4
-2
0
2
4
6
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
% Change, SAAR
Q2: 2017US: 3.0%
U.S. Real Gross Domestic Product
Source: Bureau of Economic Analysis via Haver Analytics
4
Real Gross Domestic product
Source: Bureau of Economic Analysis via Haver Analytics
Q2 Q3 Q4 Q1 Q2CHANGE FROM PREVIOUS QUARTER AT COMPOUND ANNUAL RATE [PERCENT]:
Gross Domestic Product 2.2 2.8 1.8 1.2 3.0
Personal Consumption Expenditures 3.8 2.8 2.9 1.9 3.3Nonresidential Fixed Investment 3.3 3.4 0.2 7.2 6.9
Structures 0.5 14.3 -2.2 14.8 6.2Equipment -0.6 -2.1 1.8 4.4 8.8Intellectual Property Products 11.1 4.2 -0.4 5.7 4.9
Residential Fixed Investment -4.7 -4.5 7.1 11.1 -6.5
Exports of Goods & Services 2.8 6.4 -3.8 7.3 3.7Imports of Goods & Services 0.4 2.7 8.1 4.3 1.6
-0.9 0.5 0.2 -0.6 -0.3
Final Sales to Domestic Purchasers 2.6 2.2 2.3 2.4 2.7LEVEL IN QUARTER AT SEASONALLY ADJUSTED ANNUAL RATE [Billions of Chained (2005) Dollars]:
Change in Private Inventories 12.2 17.6 63.1 1.2 1.8
Net Exports of Goods & Services -572.4 -557.3 -631.1 -622.2 -613
Government Consumption Expenditures & Gross Investment
2016 2017
5
Personal Income and Expenditures
Source: Bureau of Economic Analysis/Haver Analytics
-10
-8
-6
-4
-2
0
2
4
6
8
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YoY % Chg Real Personal Consumption ExpendituresReal Personal Income
July 2017RPCE: 2.7%RPI: 1.7%
6
Retail Sales
Source: Census Bureau via Haver Analytics
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YoY % Chg
YoY % ChangeAugust: 3.2%
July: 3.5%June: 3.0%
7
-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.
Total Employment Growth
Monthly ChangeAugust: 156
July: 189June: 210
Source: Bureau of Labor Statistics/Haver Analytics
8
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
Percent
August 2017US: 4.4%
9
52
54
56
58
60
62
64
66
68
1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017
Percent of Population
Labor Force Participation Rate
Source: Bureau of Labor Statistics/Haver Analytics
August 2017US: 62.9
10
Average Hourly Earnings
0.0
1.0
2.0
3.0
4.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YoY % Chg
Source: Bureau of Labor Statistics/Haver Analytics
11
August: 2.5%
Investment in Non-Residential Structures
Source: Bureau of Economic Analysis via Haver Analytics
-40
-30
-20
-10
0
10
20
30
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
% Change, SAAR
2Q: 20176.2%
12
Investment in Equipment
Source: Bureau of Economic Analysis via Haver Analytics
-50
-40
-30
-20
-10
0
10
20
30
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
% Change, SAAR
2Q: 20178.8%
13
Residential Fixed Investment
-40
-30
-20
-10
0
10
20
30
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
% Change, SAAR
2Q:2017-6.5%
Source: Bureau of Labor Statistics/Haver Analytics
14
Single-family Existing vs New Home Sales
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
0.2
0.4
0.6
0.8
1.0
1.2
1.4
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions, SAARMillions, SAAR New Home Sales (Left axis)
Existing Home Sales (Right axis)
90s Average: New Sales
90s Average: Existing Sales
Source: Census Bureau via Haver Analytics
15
Private Single-Family Housing Starts & Permits
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions, SAAR Single-family Housing PermitsSingle-family Housing Starts
August 2017Permits: 0.800Starts: 0.851
90's Average Permits: 1.010
90's Average Starts: 1.105
Source: Census Bureau via Haver Analytics
16
Home Price Index
17
-20
-15
-10
-5
0
5
10
15
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YoY% Change
Total Sales
Non-Distressed Sales
July 2017Total: 6.7%
Non-Distressed: 5.9%
Source: CoreLogic Information Solutions, Inc.
Multi-Family Housing Starts & Permits
Source: Census Bureau via Haver Analytics
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Millions, 3-month average, SAAR
Multi-family Housing PermitsMulti-family Housing Starts
August 2017Permits: 0.500Starts: 0.347
90's Average Permits: 0.313
90's Average Starts: 0.268
18
Regional Economic Trends
19
Economic Activity in the Fifth DistrictManufacturing Sector
20
30
35
40
45
50
55
60
65
70
-40
-30
-20
-10
0
10
20
30
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
3-m
onth
ave
rage
Manufacturing Composite Index (Left Axis)
ISM Manufacturing (Right Axis)
Richmond Manufacturing Survey and ISM Manufacturing Survey
Source: The Federal Reserve Bank of Richmond/Institute of Supply Management
Economic Activity in the Fifth District Service Sector
21
30
35
40
45
50
55
60
65
70
-40
-30
-20
-10
0
10
20
30
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
3-m
onth
ave
rage
Services Revenue Index (Left Axis)
ISM Nonmanufacturing (Right Axis)
Richmond Service Sector Survey and ISM Nonmanufacturing Survey
Source: The Federal Reserve Bank of Richmond/Institute of Supply Management
Payroll Employment
22
Source: Bureau of Labor Statistics/Haver Analytics
-6
-5
-4
-3
-2
-1
0
1
2
3
4
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YoY % Chg (SA) U.S. Virginia Maryland Delaware
August 2017US: 1.4%VA: 1.5%MD: 2.3%DE: 0.6%
Total Nonfarm Payroll Employment
23
Source: Bureau of Labor Statistics/Haver Analytics
90
92
94
96
98
100
102
104
106
108
110
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
U.S.
Virginia
Maryland
Delaware
Index: Dec. 2007 = 100
0.5
4.7
8.6
18.9
1.9
5.7
14.0
15.7
10.8
3.9
15.4
0.2
4.8
5.9
16.9
1.7
5.1
18.3
13.6
10.2
5.1
18.2
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)
2016 U.S.Virginia
Virginia Industry Structure
24
Source: Bureau of Labor Statistics/Haver Analytics
Virginia Industry Growth
25
1.4
8.8
3.2
1.1
0.4
-2.4
1.8
3.0
2.1
2.1
1.5
0.0
1.5
-2.6
2.4
0.6
0.1
-5.8
2.6
2.4
4.1
2.6
1.4
-0.2
-8 -6 -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 (SA)
August 2017
U.S.Virginia
Source: Bureau of Labor Statistics/Haver Analytics
Maryland Industry Structure
26
5.1
8.6
18.9
1.9
5.7
14.0
15.7
10.8
3.9
15.4
6.0
3.8
17.2
1.4
5.5
16.3
16.9
10.0
4.2
18.6
0 2 4 6 8 10 12 14 16 18 20
Natural Resources & Construction
Manufacturing
Trade, Transportation & Utilities
Information
Financial Activities
Professional & Business Services
Education & Health Services
Leisure & Hospitality
Other Services
Government
Employment Share (Percent)
2016 U.S.Maryland
Source: Bureau of Labor Statistics/Haver Analytics
Maryland Industry Growth
27
1.4
3.7
1.1
0.4
-2.4
1.8
3.0
2.1
2.1
1.5
0.0
2.3
4.8
0.1
1.0
-2.7
-0.4
5.6
3.4
1.3
2.7
1.1
-4 -2 0 2 4 6 8
Total
Natural Resources & Construction
Manufacturing
Trade, Transportation & Utilities
Information
Financial Activities
Professional & Business Services
Education & Health Services
Leisure & Hospitality
Other Services
Government
YoY % Chg (SA)
August 2017 U.S.Maryland
Source: Bureau of Labor Statistics/Haver Analytics
Delaware Industry Structure
28
5.1
8.6
18.9
1.9
5.7
14.0
15.7
10.8
3.9
15.4
4.6
5.7
18.2
1.0
10.4
13.5
17.0
11.0
4.1
14.4
0 2 4 6 8 10 12 14 16 18 20
Natural Resources & Construction
Manufacturing
Trade, Transportation & Utilities
Information
Financial Activities
Professional & Business Services
Education & Health Services
Leisure & Hospitality
Other Services
Government
Employment Share (Percent)
2016 U.S.Delaware
Source: Bureau of Labor Statistics/Haver Analytics
Delaware Industry Growth
29
1.4
3.7
1.1
0.4
-2.5
1.8
3.0
2.1
2.1
1.5
0.0
0.6
0.5
0.4
-2.9
0.0
2.3
-0.3
3.1
4.8
-2.7
-0.3
-4 -2 0 2 4 6
Total
Natural Resources & Construction
Manufacturing
Trade, Transportation & Utilities
Information (NSA)
Financial Activities
Professional & Business Services
Education & Health Services
Leisure & Hospitality
Other Services
Government
YoY % Chg (SA)
August 2017 U.S.Delaware
Source: Bureau of Labor Statistics/Haver Analytics
Professional & Business Services Employment
30
85
90
95
100
105
110
115
120
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
U.S.
Virginia
Maryland
Delaware
Index: Dec. 2007 = 100
Source: Bureau of Labor Statistics/Haver Analytics
Health and Education Services Employment
31
85
90
95
100
105
110
115
120
125
130
135
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
U.S.
Virginia
Maryland
Delaware
Index: Dec. 2007 = 100
Source: Bureau of Labor Statistics/Haver Analytics
Goods-Producing Employment Index
32
70
75
80
85
90
95
100
105
110
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
U.S.
Virginia
Maryland
Delaware
Index: Dec. 2007 = 100
Source: Bureau of Labor Statistics/Haver Analytics
Unemployment Rate
33
0
1
2
3
4
5
6
7
8
9
10
11
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Percent (SA) U.S. Virginia Maryland Delaware
August 2017US: 4.4%VA: 3.8%MD: 3.9%DE: 4.9%
Source: Bureau of Labor Statistics/Haver Analytics
Unemployment in Fifth District Counties
34
Source: Bureau of Labor Statistics/Haver Analytics
Housing Starts
35
Source: Bank of Tokyo-Mitsubishi UFJ/Haver Analytics
0
200
400
600
800
1,000
1,200
1,400
1,600
0
5
10
15
20
25
30
35
40
45
50
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
SAAR, thousandsSAAR, thousands
Virginia (Left Axis)
United States (Right Axis)
Virginia 1990s Average
United States 1990s Average
Housing Starts
36
0
2
4
6
8
10
12
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
SAAR, thousandsSAAR, thousands
Maryland (Left Axis)
Delaware (Right Axis)
Source: Bank of Tokyo-Mitsubishi UFJ/Haver Analytics
Single-Family Building Permits
37
-60
-40
-20
0
20
40
60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YoY % Chg3-month average
U.S.Virginia
July 2017US: 11.4%VA: 17.7%
Source: U.S. Census Bureau/Haver Analytics
Single-Family Building Permits
38
-60
-40
-20
0
20
40
60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YoY % Chg,3-mma Maryland
Delaware
July 2017MD: 14.5%DE: 16.7%
Source: U.S. Census Bureau/Haver Analytics
-100
-50
0
50
100
150
200
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YoY % Chg3-month average U.S.
VirginiaJuly 2017US: -0.6%VA: -4.7%
Multi-Family Building Permits
39
Source: U.S. Census Bureau/Haver Analytics
Multi-Family Building Permits
40
-200
-100
0
100
200
300
400
500
600
700
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YoY % Chg,3-month average
Maryland
Delaware
July 2017MD: -41.9%DE: 254.5%
Source: U.S. Census Bureau/Haver Analytics
House Prices—CoreLogic HPI
41
Source: CoreLogic Information Solutions, Inc.
-20
-15
-10
-5
0
5
10
15
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YoY % Chg (SA) U.S.
Virginia
Maryland
Delaware
July 2017US: 6.7%VA: 2.7%MD: 2.7.%DE: 1.5%
CoreLogic HPI
42
Source: CoreLogic Information Solutions, Inc.
Summary
• As was expected, economic growth picked up in the second quarter, and labor markets remain strong by most indicators.
• The consumer is spending more, with growth in employment and some pick-up in wages as well as a continually declining unemployment rate.
• Strengthening labor markets have been evident across Maryland, Virginia, and Delaware as well, though not as strong as the nation.
• Activity in the housing sector remains steady in the U.S. and across all three states despite the second quarter slowdown in residential investment.
43
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.
6
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