Economic Trends Chip Filer, Ph.D. Associat e Professor Old Dominion Universit y, Depart ment of Economics
Rate of Growth: GDP (U.S.) and GRP (Hampton Roads) 2001-2015 5 4 2.38 3 Growth Rate 2 1 1.14 0 -1 -2 -3 -4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e Percent change real GDP Source: Bureau of Economic Analysis and the Old Dominion University Economic Forecasting Proj ect. Data on GDP incorporates latest BEA revisions in September 2015. Real GRP for Hampton Roads is calculated by using the GDP price deflator. e represents estimated value
Oil Spot Prices Excess Supply Weak Demand? Source: United States Energy Information Administration.
The Fed Funds Futures Market is “Bearish” 0.00 0.10 0.20 0.30 0.40 0.50 0.60 March 2016 0.385 June 2016 0.435 September 2016 0.460 December 2016 0.500 Source: CME Group, February 23, 2016
Expect a bumpy 2016 We are forecasting growth for the year, but some quarters during the year could be weak. The National In spite of the slower growth, we anticipate the FED will Economy in increase the target fed funds 2016 rate during 2016 (perhaps 3 times) This will likely flatten the yield curve rather than put tremendous pressure on long- term yields.
Hampton Roads’ Gross Regional Product Attributable to DOD Spending (1984-2016) 49.5% 48.8% 50% 44.4% 39.2% 40% 33.5% 1984 49.5% 30% 1991 48.8% 2000 33.5% 20% 2011 44.4% 10% 2015(e) 39.2% 2016(f) 37.6% 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
Caps on Department of Defense Discretionary Spending, FY 2012 to FY 2021 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 2017 700 Billions of dollars 650 600 550 Sequestration 500 450 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 BCA 2011 Sequestration
The 2007-2009 Recession Including Virginia and Hampton Roads (% Decline in Total US Non-farm Payroll Employment from Pre-Recession Peak) Month After Pre-Recession Peak 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Decline from Pre-Recession Peak 4% 3.40% Pre-Recession Peak Dates: U.S.: January, 2008 2% 1.80% Virginia: April, 2008 Hampton Roads: July, 2007 0% -2.32% -2% -4% -6% -8% USA VA HR
Change in Employment by Sector’s (Private Ownership) in Hampton Roads From 1 st Quarter 2007 to 1 st Quarter 2015 (Virginia Portion of Hampton Roads) Health Care and Social Assistance 15,863 Professional, Scientific, and Technical… Management of Companies and… Accommodation and Food Services Educational Services Finance and Insurance Administrative, Waste Mgmt. Real Estate, Rental, Leasing Wholesale Trade Manufacturing Information Retail Trade -13,124 Construction -25,819 All Industries -28,000 -18,000 -8,000 2,000 12,000 Source: Virginia Employment Commission: Covered Employment and Wages by Private Ownership and the Old Dominion University Economic Forecasting Project.
10 12 Source: Bureau of Labor Statistics 0 2 4 6 8 1/1/2000 9/1/2000 Unemployment Rate in U.S., Virginia Recession 5/1/2001 1/1/2002 9/1/2002 5/1/2003 1/1/2004 and Hampton Roads 9/1/2004 5/1/2005 US 1/1/2006 9/1/2006 5/1/2007 Virginia 1/1/2008 9/1/2008 5/1/2009 1/1/2010 9/1/2010 Hampton Roads 5/1/2011 1/1/2012 9/1/2012 5/1/2013 1/1/2014 9/1/2014 5/1/2015
We are forecasting better growth in 2016 than in 2013 and 2014. The The region will continue to Regional grow at a slower pace than Economy in the nation as we transition 2016 away from a DoD reliant economy. JOBS, JOBS, JOBS!
National Economic Outlook for 2016 Historical Forecast 2013 2014 2015 2016 Real Gross Domestic Product 1.49% 2.42% 2.38% est. 2.03% Employment Growth 1.70% 1.90% 2.11% 1.50% Unemployment Rate 7.4% 5.6% 5.3% 5.1% Consumer Price Index 1.22% 0.70% 0.13% 1.34% CPI - Core 1.71% 1.60% 1.83% 2.03% 3-Month Treasury Bill (end of 0.06% 0.03% 0.05% 1.25% year) 10-Year Treasury Bond 2.35% 2.55% 2.14% 3.15% 30-Year Conventional Mortgage 3.98% 4.17% 3.85% 4.25% Rate
Regional Economic Outlook for 2016 2016 Growth 2015 Forecast Forecasts Nominal Gross Regional $93.07B (e) $97.63B Product Real Gross Regional $84.38B (e) $85.72B 1.59% Product Civilian Employment 759,758 766,900 0.94% Unemployment Rate 5.06% 4.30% Taxable Sales $21.78B $22.56B 3.60% Hotel Revenue $746.22M $777.56M 4.20% General Cargo Tonnage 19.98M 20.52M 2.70% Housing Permit Value $819.15M $847.00M 3.40%
2016 Hampton Roads Real Estate Market Review & Forecast E.V. Williams Center for Real Estate 2088 Constant Hall Norfolk, VA 23529 www.odu.edu/business/center/creed
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