The views expressed in the report do not represent official positions on the part of Old Dominion University, or its President John Broderick, the Old Dominion University Board of Visitors, the Virginia Chamber of Commerce, or its President Barry DuVal, the Virginia Department of Commerce and Trade, or any of the other generous donors.
The Strome College of Business and the University continue to provide important support for this report. However, it would not appear without the vital backing of these donors, who believe in the power of rational discourse to improve our circumstances. Anonymous Donor Thomas Lyons The Aimee and Frank Batten, Jr. Foundation Patricia W. and J. Douglas Perry Jane Batten Virginia Chamber of Commerce R. Bruce Bradley Virginia Department of Richard T. Cheng Commerce and Trade Arthur A. Diamonstein George Dragas, Jr. Edward L. Hamm, Jr. Hampton Roads Chamber of Commerce
Here is our plan of attack today. • I’ll set the stage for the report by comparing Virginia to other cities and regions up and down the Atlantic Coast. • My colleague Larry “Chip” Filer will focus on state and national economic trends. • I’ll return to talk about specific problems and issues, e.g., migration patterns in and out of Virginia metropolitan areas, how we might save money by consolidating the provision of public services, and the challenges facing Virginia’s airports.
• Let’s talk about “real” incomes---the actual purchasing power of the money we earn. • After we adjust the incomes we earn in Virginia for the cost-of-living, how do we fare? The Answer: Very well! • In fact, the real spending power of the median (50th percentile) Virginia household is higher than that of the median household in New York City---and most other large cities. Let’s look at the numbers for 2013.
(2013) Actual Median Cost-of-Living “ Real ” Median Household Income Index Household Income Loudoun County $122,238 112.4 $108,753 Fairfax County $110,292 122.5 $90,034 Prince William County $98,071 109.6 $89,481 Arlington County $103,208 135.3 $76,281 Chesapeake $69,743 105.9 $65,857 Suffolk $66,085 103.5 $63,850 VIRGINIA $63,907 103.2 $61,925 Virginia Beach $65,219 111.2 $58,650 UNITED STATES $53,046 100.0 $53,046 Charlotte $52,375 108.6 $48,227 Atlanta $46,631 114.1 $40,869 Miami/Dade $43,100 107.0 $40,280 Scott County, Va. $38,355 96.7 $39,664 Lynchburg $38,138 100.0 $38,138 NYC (Manhattan) $69,659 185.5 $37,552 Richmond $40,496 112.8 $35,901 Roanoke $38,145 109.4 $34,867 Philadelphia $37,146 134.5 $27,618
The other four boroughs of New York City differ from Manhattan. Here’s how the five boroughs compared to each other and Virginia in terms of “real” median household incomes in 2013: Borough Median HH Income COLI “Real” Income Virginia $62,666 107.0 $60,722 Staten Island $72,569 125.4 $57,870 Manhattan $69,569 185.5 $37,552 Queens $57,001 158.6 $35,940 Brooklyn $46,085 188.3 $24,472 The Bronx $34,388 176.8 $19,450
• Note that average household income in Manhattan was $132,754 in 2013---quite a bit more than Manhattan’s median (50 th percentile) household income of $69,569. A few households there earn a lot; the majority of households do not. • This tells us that incomes are distributed very unequally in Manhattan (and in all of NYC for that matter).
Measuring Income Inequality: Gini Coefficients 2011
THE VIRGINIA ECONOMY COPES WITH ECONOMIC HEADWINDS
• The Virginia economy struggled in 2013 and 2014, primarily because of ebbing federal spending. • Our economic performance improved in 2015. 2016 bodes to continue that improvement.
Real GDP Growth Rates: U.S. and Virginia 6 5 4 U.S. 3 2.4 2 1 0.02 Virginia 0 -1 -2 -3 -4 2004 2006 2009 2011 2016 2002 2003 2005 2007 2008 2010 2012 2013 2014 2015
Contributions to 2014 Virginia GDP Growth by Major Industry Sector
Post-Recession Real GDP Growth (2009-2014) 2.36 Blacksburg Charlottesville 2.35 US 2.05 1.40 Winchester 1.15 Kingsport-Bristol 1.06 Richmond 1.00 Washington-NOVA Virginia 0.82 Hampton Roads 0.31 0.28 Harrisonburg 0.14 Staunton-Waynesboro -0.18 Roanoke Lynchburg -0.50 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2011 Q1 State Leading Economics Indices: 2011 Q2 Comparison Across Similar States 2011 Q3 2011 Q4 2012 Q1 2012 Q2 FL 2012 Q3 2012 Q4 TX 2013 Q1 NC 0.69 Virginia 2013 Q2 2013 Q3 VA 0.65 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2.10
• The Virginia economic slowdown in 2013 and 2014 primarily reflected contractions in federal spending; however, Texas and Florida also are both large recipients of federal spending and their economies didn’t contract as much. Why? • The Answer: Relatively speaking, we are more dependent upon federal spending than they are. Simply put, their economies are more diversified than ours.
Federal Spending Trends in Virginia (In Billions) Virginia U.S. VA Share FY 2010 $100.4 $2,483.5 4.04% FY 2011 $117.7 $3,291.1 3.57% FY 2012 $114.4 $3,707.7 3.09% FY 2013 $92.8 $2,917.4 3.18% FY 2014 $91.8 $2,763.8 3.32% FY 2015 $67.2 $2,214.7 3.03% FY2012-FY2015 -33% -11%
Philadelphia Federal Reserve Leading Economic Index Virginia’s Three Largest Metro Areas 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 -8.0 2009 2010 2011 2012 2013 2014 2015 Va Beach/Norfolk Richmond NOVA
• The gap between the index average and actual real GDP is a rough measure of the dependence on federal spending dollars. 2014 Index Average 2014 Actual Real GDP Hampton Roads 2.53 -0.10% Richmond 1.98 1.60% DC/NOVA 2.95 0.30%
Months Required to Re-establish Peak Employment Levels 0 12 24 36 48 60 72 84 96 4% U.S. 3.10% Change from Pre-Recession Peak 2% Virginia 1.05% 0% -2% -4% -6% -8%
Months Required to Re-establish Peak Employment Levels: Virginia and the Major Metros 1 13 25 37 49 61 73 85 97 4% RICH Change from Pre-Recession Peak 2% 0% VIRGINIA ROAN -2% -4% HROADS -6% LYNCH -8% -10% Hampton Roads Richmond Lynchburg Roanoke VA
Unemployment Rates: Metro Area Comparison
Changes in Labor Force Participation (2014-2015)
Best/Worst Performing Sectors Metropolitan Area Best Performing Sector Worst Performing Sector Goods Producing Federal Government Blacksburg 9.20% 0.00% Professional and Business Services Manufacturing Charlottesville 20.34% -7.32% Employment Services Information Hampton Roads 28.36% -30.13% Private Service Provision Goods Producing Harrisonburg 11.30% -9.59% Education and Health Services Construction Lynchburg 20.42% -31.25% Employment Services Information Richmond 44.66% -22.77% Education and Health Services Information Roanoke 13.19% -22.73% Ambulatory Health Services Hospitals Wash DC 29.48% -7.66%
Defense Spending
• Let’s take a look at DOD issues in greater detail. • The Department of Defense influences the Virginia economy in two main ways: – Compensation of military and civilian employees – Contracts with private sector firms for goods and services
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