/4/25 Cardinal Bank & George Mason University 23 rd Annual Economic Conference What Will Drive Growth in the Washington Area Economy Going Forward? Stephen S. Fuller, Ph.D. Dwight Schar Faculty Chair and University Professor Director, Center for Regional Analysis George Mason University January 5, 25 Top Ten: How Does the Washington Area Economy Rank, 95-23 95 2 24 23 23 NYC LA Chi Phil Detroit SF/Oak Boston Pitts Wash St. Louis Sources: U.S. Bureau of Economic Analysis; GMU Center for Regional Analysis GMU Center for Regional Analysis
/4/25 Top Ten: How Does the Washington Area Economy Rank, 95-23 95 2 24 23 23 NYC NYC LA LA Chi Chi Phil Wash Detroit Houston SF/Oak Dallas Boston Phil Pitts SF/Oak Wash Boston St. Louis Atlanta Sources: U.S. Bureau of Economic Analysis; GMU Center for Regional Analysis Top Ten: How Does the Washington Area Economy Rank, 95-23 95 2 24 23 23 NYC NYC NYC LA LA LA Chi Chi Chi Phil Wash Houston Detroit Houston Wash SF/Oak Dallas Dallas Boston Phil SF/Oak Pitts SF/Oak Phil Wash Boston Boston St. Louis Atlanta Atlanta Sources: U.S. Bureau of Economic Analysis; GMU Center for Regional Analysis GMU Center for Regional Analysis 2
/4/25 Top Ten: How Does the Washington Area Economy Rank, 95-23 95 2 24 23 23 NYC NYC NYC NYC LA LA LA LA Chi Chi Chi Chi Phil Wash Houston Houston Detroit Houston Wash Dallas SF/Oak Dallas Dallas Wash Boston Phil SF/Oak Atlanta Pitts SF/Oak Phil Miami Wash Boston Boston Phoenix St. Louis Atlanta Atlanta Boston Sources: U.S. Bureau of Economic Analysis; GMU Center for Regional Analysis Top Ten: How Does the Washington Area Economy Rank, 95-23 95 2 24 23 23 NYC NYC NYC NYC NYC LA LA LA LA LA Chi Chi Chi Chi Dallas Phil Wash Houston Houston Wash Detroit Houston Wash Dallas Houston SF/Oak Dallas Dallas Wash Chi Boston Phil SF/Oak Atlanta Atlanta Pitts SF/Oak Phil Miami Wash Boston Boston Phoenix St. Louis Atlanta Atlanta Boston 29 forecast Sources: U.S. Bureau of Economic Analysis; GMU Center for Regional Analysis GMU Center for Regional Analysis 3
/4/25 From Company Town To Global Business Center 2 Structure of the Greater Washington Economy Non-Local Business 2. % Other Federal.7 % Local Serving Activities 34.8% Total Federal 39.8% Fed Wages & Salaries.% Procurement 9.% Source: GMU Center for Regional Analysis GMU Center for Regional Analysis 4
/4/25 29 Structure of the Greater Washington Economy Non-Local Business 7.6% Other Federal 8.4% Fed Wages & Salaries 7.3% Total Federal 28.8% Procurement 3.% Local Serving Activities 38.2% Source: GMU Center for Regional Analysis From the Recession to the Federal Sequester and Shutdown GMU Center for Regional Analysis 5
/4/25 WMSA Payroll Job Change: Private Sector The Great Recession and Recovery Prof. & Bus. Svcs Educ & Health Svcs Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Aug 28-Feb 2 Total -78-48 -34-23 -23 - -2-8 - -7-4 (s) -8-6 -4-2 The GRP* Effects of Private Sector Job Change in the Washington Metropolitan Area Aug 28-Feb 2 (in 24 $s) Job Change Total GRP Value - 77,7 - $28,467,35, Source: GMU Center for Regional Analysis *Gross Regional Product $56,99 per job contribution to GRP GMU Center for Regional Analysis 6
/4/25 WMSA Payroll Job Change: Private Sector The Great Recession and Recovery Prof. & Bus. Svcs Educ & Health Svcs Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Aug 28-Feb 2 Feb 2-Nov 24-48 -34-23 -23 - -2-8 - -7-4 (s) Total -78 Total 243-8 -6-4 -2 2 4 6 8 2 4 2 25 39 44 49 58 The GRP* Effects of Private Sector Job Change in the Washington Metropolitan Area Aug 28-Nov 24 (in 24 $s) Job Change Total GRP Value - 77,7 - $28,467,35, + 242,4 + $27,483,8, 2 + 64,7 - $983,55, Source: GMU Center for Regional Analysis *Gross Regional Product $56,99 per job contribution to GRP 2 $3,382 per job contribution to GRP GMU Center for Regional Analysis 7
/4/25 Summary of Federal Spending Trends in the Washington Metropolitan Area, 2-23 Federal Procurement Outlays declined $3.3 billion or 6.% between FY 2 and FY 23. Federal employment has declined since peaking in July 2, losing 2,8 jobs or 5.6%. Federal payroll declined by $2.4 billion or 5.7% between FY 2 and FY 24 and will continue to decline as the workforce shrinks and older workers retire and are replaced by younger workers. s 4 35 3 25 Federal Employment in the Washington Metro Area, 95-24 Eisenhower - 5 Kennedy Johnson + 74 Nixon - Ford Carter Reagan Bush Clinton Bush 2 + 35 +7 +8-55 + 23 Obama +2-7 =+4 2 5 95 955 96 965 97 975 98 985 99 995 2 25 2 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis GMU Center for Regional Analysis 8
/4/25 Federal Employment as a Percentage of Total Employment in Washington 95-22 (jobs in thousands) Year Total Federal % 95 592.4 227.2 38.4 96 745.7 236.2 3.7 97,84.6 32.7 27.2 975,336.8 347. 26. 98,937.9 367.7 9. 2 2,679.3 326.2 2.2 2 2,966.6 38.2 2.8 22 3,379.4 34.9. Sources: U.S. Bureau of Labor Statistics; GMU Center for Regional Analysis 25 2 5 5-5 - -5-2 Federal Government Jobs in the Washington Metropolitan Area, 22-24 (s) Annual Data Annual Month over Year 3 29 2 2 22 23 24 Sep Jun Mar Dec Sep Jun Mar Dec Sep Jun Mar Dec Sep Jun Mar Dec Sep Jun Mar Dec Sep Jun Mar 28 25 22 Nov-4 Total: 365.7 GMU Center for Regional Analysis 9
/4/25 $ Billions 9 8 7 6 5 4 3 2 Federal Procurement in the Washington Metro Area, FY 98-24 TOTAL = $,64.9 Billion 79.8 76.3 69. 7.2 Source: US Census, Consolidated Federal Funds Report and USAspending.gov Professional & Business Services Jobs in the Washington Metropolitan Area, 22-24 (s) Annual Data Annual Month over Year 3 29 2 2 22 23 24 25 2 5 5-5 - -5-2 Sep Jun Mar Dec Sep Jun Mar Dec Sep Jun Mar Dec Sep Jun Mar Dec Sep Jun Mar Dec Sep Jun Mar 28 25 22 Nov-4 Total: 78.5 GMU Center for Regional Analysis
/4/25 (s) 7. 6. 5. 4. 3. 2.. - Average Wage and Job Change Washington Metro Area 2/2-/24 Job Change (left axis) $94.2 44. Professional & Business Services 48.6 $5.4 Education & Health Services 23 Wage (right axis) 58. $24. Leisure & Hospitality (s of 23 $s $ $9 $8 $7 $6 $5 $4 $3 $2 $ $ Source: Bureau of Labor Statistics, GMU Center for Regional Analysis (s of 23 $s) 72. Average Wages in the Washington Metro Area, 2-23 7. 68. 66. 64. 63. 63. 63.9 65.5 66.2 67. 68.2 67.8 69.5 7.6 69.8 69.3 68.3 62. 6. 58. 2 22 23 24 25 26 27 28 29 2 2 22 23 Source: Bureau of Labor Statistics, GMU Center for Regional Analysis GMU Center for Regional Analysis
/4/25 The Household Income Effects of Structural Change in the Washington Metropolitan Area Jurisdiction Median HH Income 23* Change from 29* District (DC) $67,575 $2,99 Frederick Cty 84,38 - $5,856 Montgomery Cty 98,326 - $4,552 Prince George s Cty 72,52 - $4,6 Arlington County 2,5 - $,675 Fairfax County,79 - $249 Loudoun County 6,768 - $7,283 Prince Wm County 95,268 - $2,234 Alexandria City 86,775 $2,985 Total Metro Area $9,49 - $2,287 Source: U.S. Census, ACS -Year; GMU Center for Regional Analysis *in 23 dollars 6.% 5.% 4.% 5 Largest Metro Area Job Markets GRP Percent Change: 22 23 Washington -.8% 3.% 2.%.%.% -.% -2.% Source: Bureau of Economic Analysis, GMU Center for Regional Analysis GMU Center for Regional Analysis 2
/4/25 Job Change in the 5 Largest Metropolitan Areas: 29 2.% Washington +.4%.5%.% -.5% -.% -.5% -2.% -2.5% Job Change in the5 Largest Metropolitan Areas: 2 2 3.% 2.5% Washington +.4% 2.%.5%.%.5%.% GMU Center for Regional Analysis 3
/4/25 Job Change in the5 Largest Metropolitan Areas: 2 22 4.5% 4.% 3.5% 3.% 2.5% 2.%.5%.%.5%.% Washington +.3% Job Change in the5 Largest Metropolitan Areas: 22-23 4.5% 4.% 3.5% 3.% 2.5% 2.%.5%.%.5%.% Washington +.% GMU Center for Regional Analysis 4
/4/25 The Washington Region s Economy at the End of 24 Job Change in the 5 Largest Metropolitan Areas:Nov 23 Nov 24 5.% 4.% Washington +.6% 3.% 2.%.%.% -.% GMU Center for Regional Analysis 5
/4/25 Job Change in the 5 Largest Metropolitan Areas: Nov 23 Nov 24 (s) 4 2 8 6 4 2-2 Washington +8,9-2 -4-6 -8 Annual Job Change in the Washington Metropolitan Area, 22-24 Annual Data (s) Annual Month over Year 8 2 2 22 23 24 6 4 2 22 25 28 GMU Center for Regional Analysis 6
/4/25 Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Job Change in the Washington Metropolitan Area by Sector Nov 23 Nov 24-4 -3-2 -3 2 (s) Total = 8,9 3 3 4 (2.) (.) -. 2. 3. 5 4 8 Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Job Change in the Washington Metropolitan Area by Sector Oct 24 Nov 24-2 - (s) Total = 8,6 3 (2.) (.) -. 2. 3. 5 GMU Center for Regional Analysis 7
/4/25 Job Change in the District of Columbia by Sector, Nov 23 - Nov 24 Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. - 2 (s) Total 2,6 3 (2.) (.) -. 2. 3. 6 Job Change in the District of Columbia by Sector, Oct 23 Nov 24 Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. - - (s) Total,4 (2.) (.) -. 2. 3. GMU Center for Regional Analysis 8
/4/25 Job Change in Suburban Maryland by Sector, Nov 23 Nov 24 Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. -3 - - - (s) Total 4,3 2 2 3 3 (2.) (.) -. 2. 3. Job Change in Suburban Maryland by Sector, Oct 24 Nov 24 Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. - (s) Total 3,8 3 (2.) (.) -. 2. 3. GMU Center for Regional Analysis 9
/4/25 Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Job Change in Northern Virginia by Sector, Nov 23 Nov 24-4 - - - - 2 2 (s) Total 6,5 3 (2.) (.) -. 2. 3. 6 Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Job Change in Northern Virginia by Sector, Oct 24 Nov 24 - (s) Total 3,6 2 3 (2.) (.) -. 2. 3. 7 GMU Center for Regional Analysis 2
/4/25 Rankings by the Association of Foreign Investors in Real Estate, January 25 Top 5 Global Cities 28 29 2 2 22 23 24 25 New York 3 3 2 London 2 2 3 2 2 2 San Francisco - - - - 5 3 3 3 Tokyo - 4 5 - - - - 4 Madrid - - - - - - - 5 Washington, D.C. 2 2 2 3 4 - - Source: Association of Foreign Investors in Real Estate, January 8, 25; GMU Center for Regional Analysis Rankings by the Association of Foreign Investors in Real Estate, January 25 Top 5 U.S. Cities 28 29 2 2 22 23 24 25 New York 2 2 San Francisco 4 3 3 4 3 2 2 2 Houston - 5 - - - 4 3 3 Los Angeles 3 4 5 5 5-5 4 Washington, D.C. 2 2 2 3 4 5 Boston - - 4 3 4 5 - - Source: Association of Foreign Investors in Real Estate, January 8, 25; GMU Center for Regional Analysis GMU Center for Regional Analysis 2
/4/25... [U]nlike other cities which currently have technology and energy drivers, D.C. mostly depends on the U.S. government to keep occupancy in balance; given the current situation, Washington area real estate is the short-term, unintended victim of Federal budget tightening. On a long-term basis, Washington, as the capital city of the free world, remains a very attractive opportunity. -- James A. Fetgatter, Chief Executive, Association of Foreign Investors in Real Estate January 8, 25 Source: Association of Foreign Investors in Real Estate, GMU Center for Regional Analysis The Washington Region s Economy of the Future GMU Center for Regional Analysis 22
/4/25 Washington Metropolitan Area and U.S. Economic Growth 22-29 (annual percent real change) Year U.S. WMSA 23 2.2 -.8 24 2.4.7 25 3..4 26 2.7.9 27 2.7 2.4 28 2.4 2.9 29 2.8 3.2 Sources: IHS Economics, Inc. January 25 ; GMU Center for Regional Analysis % 4 2-2 U.S. GDP and Washington Area GRP 27 25 29 (Annual % Change) Washington U.S. -4 Source: IHS Economics, GMU Center for Regional Analysis, Forecast: January 25 GMU Center for Regional Analysis 23
/4/25 Principal Sources of Job and GRP Growth in the Washington Area, 24-29 (in thousands) Growth Job % of Total Average Value Sectors Change Job Change Added per Job* Prof. & Bus. Ser. 4.4 48.3 $57,969 Construction 48.8 2.5 $,992 Education/Health 28.7 2. $72,62 Hospitality Services 27..4 $5, State and Local 2.2 8.5 $8,736 Sub-Total 239.2.8 $9,749 Overall Total 236.9. $54,3 Sources: IHS Global Insight; GMU Center for Regional Analysis *in 24$s Job and GRP Gains and Losses for the Washington Area s Other Sectors, 24-29 (in thousands) Job % of Total Average Value Change Job Change Added per Job* Federal Gov t - 22.3-9.4 $85,84 Retail Trade.5.2 $64,478 Other Services 2.6. $86,5 Financial Services -.. $62,922 Information Services 2..9 $4,37 Manufacturing.. $249,934 Transportation 8.8 3.7 $23,5 Wholesale Trade 6.2 2.6 $25,783 Sub-Totals - 2.3 -.9 $97,8 Overall Total 236.9. $54,3 Sources: IHS Economics, Inc.; GMU Center for Regional Analysis *in 24 $s GMU Center for Regional Analysis 24
/4/25 Rethinking The Regional Economy s Future Exports are key to growing the economy Scientific and Technical Services Higher Ed and Health Services Manufacturing Agriculture and Natural Resources Leisure and Hospitality Foreign Direct Investment Growing high-value added employment builds the residentially based economy and strengthens the tax base. Fresh Approaches For Economic Development Identify the region s principal nonfederally dependent economic assets and focus marketing strategies on these sources of future growth; Unify local and regional approaches to economic development to reduce their conflicting messages and predatory practices; GMU Center for Regional Analysis 25
/4/25 High-Value Added Economic Development Targets of Opportunities Redevelop Union Station into a 2 st Century transportation, employment and residential center; Grow Dulles Airport into a center for global business building on connectivity to regional, national and world economies; Develop the Washington region as a global medical complex; Implement the White Oak Science Gateway Plan centered on FDA; Market the Washington region as a world-class cultural and sports visitor destination; Capitalize on the region s federal labs and centers: Fort Belvoir, Fort Meade/NSA, NASA, Cybersecurity/FBI, NIH/FDA/BioTech; Accelerate Prince Wm Cty/GMU Innovation /Technology Center. Strengthen the business-to-business base in the region and local jurisdictions by reducing the unproductive public costs of business operations; Re-brand the region s and local jurisdictions economic development images and business investment climates to build on their competitive assets in the national and global economies; GMU Center for Regional Analysis 26
/4/25 Invest in the region s and local jurisdictions infrastructure to strengthen their competitive positions; and, Increase the capacity of the region s educational and skills training institutions to respond to the workforce development requirements for on-going up-skilling of current workers and to prepare new-tothe-labor market workers for the Region s new and emerging economies. % 6 5 4 3 2 - -2 Economic Outlook (GRP), 27-29 Washington Area and Sub-State Areas (Annual % Change) SM NV MSA DC Source: GMU Center for Regional Analysis, Forecast: January 25 GMU Center for Regional Analysis 27
/4/25 29 Structure of the Greater Washington Economy Non-Local Business 7.6% Other Federal 8.4% Fed Wages & Salaries 7.3% Total Federal 28.8% Procurement 3.% Local Serving Activities 38.2% Source: GMU Center for Regional Analysis Becoming a Global Business Center does not happen without: strong public and private sector leadership, and increased investment in public infrastructure, workforce development and private sector productive capacity reflecting new technologies. GMU Center for Regional Analysis 28
/4/25 Thank You & Questions cra.gmu.edu GMU Center for Regional Analysis 29