COVID-19 IN VIRGINIA: ECONOMIC IMPACT ASSESSMENT...3.1 3.3 3.5 3.7 3.9 4.1 4.3 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3

Downtown Charlottesville

WORKING DRAFT

COVID-19 IN VIRGINIA: ECONOMIC IMPACT ASSESSMENT

June 29, 2020

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▪ VEC

▪ DHCD

▪ VDACS

▪ Virginia Department of Forestry

▪ Virginia Marine Products Board

▪ SBSD/VSBFA

▪ SCHEV

▪ VCCS

▪ TAX

▪ VDOT

▪ VHDA

▪ VTC

MANY STATE AGENCIES HAVE CONTRIBUTED INSIGHTS AND/OR DATA THAT HAVE INFORMED THIS IMPACT ANALYSIS*

1*VEDP takes ownership for any errors

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*** PLEASE NOTE ALL ESTIMATES IN THIS DOCUMENT ARE PRELIMINARY AND SUBJECT TO SUBSTANTIAL REVISION ***

2

National economic forecast

3

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UNPRECEDENTED ECONOMIC SHOCK: FORECASTERS PREDICT SHARP DOWNTURN IN 2020 (ESPECIALLY CURRENT QUARTER)

Source: Moody’s Analytics (June baselines); Wells Fargo (June forecast); IHS Markit (June update); Wall Street Journal (June survey); VEDP analysis

Quarterly real GDP growthAnnualized % change, billions of chained 2012 $

4

-50.00

-40.00

-30.00

-20.00

-10.00

0.00

10.00

20.00

30.00

2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4

Actual Moody's (US) Moody's (VA) Wells Fargo (US) IHS Markit (US) WSJ Consensus (US)

National spread for 2020Q2:

-32.6% to -41.9%

*2020Q1 actual for US only

(preliminary BEA release)

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MAJORITY OF ECONOMISTS SURVEYED BY WALL STREET JOURNAL BELIEVE THE RECOVERY IS STARTING, BUT WILL BE GRADUAL

Source: Wall Street Journal; University of Washington’s IHME; VEDP analysis 5

22.8%

68.4%

1.8%3.5%

1.8% 1.8%

2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3

When do you expect the economic recovery to start?Survey of 60 economists by WSJ, June 1, 2020

69.0%

8.6%

1.4%

6.9%

1.7%

"Nikeswoosh"

W-shaped V-shaped U-shaped L-shaped

What will and economic recovery look like?Survey of 60 economists by WSJ, June 1, 2020

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CURRENT FORECASTS DIFFER ON EXTENT OF DAMAGE AND RECOVERY TRAJECTORY, BUT ALIGN BY END OF 2021

100

110

120

130

140

150

160

Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21

Actuals IHS Markit Moody's Wells Fargo* CBO Average

*Wells Fargo publishes average monthly change by quarter. Quarterly estimate derived by tripling average monthly change

Source: Moody’s Analytics (June baseline); IHS Market (June forecast); Wells Fargo (June forecast); Congressional Budget Office (May 2020); VEDP analysis

Quarterly U.S. employment estimates from select macroeconomic forecastersTotal nonfarm payroll employment, 2019 – 2021, Millions of jobs

6

2020Q1 employment

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HALF OF JOBS LOST IN VIRGINIA MAY NOT BE REGAINED UNTIL EARLY 2021, WITH FULL RECOVERY POSSIBLE BY THE END OF 2022

2.7

2.9

3.1

3.3

3.5

3.7

3.9

4.1

4.3

Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23

IHS Markit Moody's Average

1IHS forecast estimates are based on national forecasts that have been applied to Virginia employment mix by VEDP

Source: Moody’s Analytics (June baseline); IHS Markit (June forecast); VEDP analysis

Quarterly Virginia employment estimates from select macroeconomic forecastersTotal nonfarm payroll employment, 2019 – 2023, millions of jobs

7

2020Q1 employment

32%

employment

recovery

51%

employment

recovery

74%

employment

recovery

100%

employment

recovery

1

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FORECASTS SUGGEST POST-C19 RECOVERY WILL BE SIGNIFICANTLY QUICKER THAN AFTER GREAT RECESSION

60

65

70

75

80

85

90

95

100

105

110

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10Q11Q12Q13Q14Q15Q16Q17Q18Q19Q20Q21Q22Q23Q24Q25Q26

IHS / Moody's average Great Recession

+

Post-Great Recession

100%

employment

recovery

(6.25 yrs)

Source: Bureau of Labor Statistics, Current Employment Survey (historic); Moody’s Analytics (June baseline); IHS Markit (June forecast); VEDP analysis

Timeline of job loss recovery post-Great Recession compared to post-C19 current forecastsHistoric quarterly U.S. employment, 2009-2014, compared to Moody’s/IHS Markit forecasts average, 2020-2026, indexed

8

Post-C19

100%

employment

recovery

(3.0 yrs)

Impact

to date

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AFTER SPIKING IN EARLY MARCH, CONSUMER SPEND IN VA HAS BEEN BELOW 2019 LEVELS FOR THE PAST THREE MONTHS

Source: Earnest Research (longitudinal panel of 6 million de-identified U.S. consumers)

Virginia and national consumer spending trends by weekYear-over-year weekly change in total spending, 2019/2020, weeks 8 – 24

10

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

Week08

Week09

Week10

Week11

Week12

Week13

Week14

Week15

Week16

Week17

Week18

Week19

Week20

Week21

Week22

Week23

Week24

VA US

Spike in consumer

spending at onset of

pandemic

Drop in consumer

spending as stay-at-

home orders take effect

February March April May June

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CONSUMER SPENDING IN VIRGINIA THIS YEAR HAS DROPPED ACROSS MOST CATEGORIES, BUT SOME HAVE SEEN GROWTH

37%

19%

14%

8%

8%

6%

2%

-1%

-1%

-2%

-3%

-6%

-6%

-7%

-9%

-13%

-18%

-21%

-24%

-28%

-38%

-41%

Specialty Food and Beverage

Home

Grocers

Hobbies and Toys

General Merchandise

Pets

Healthcare and Insurance

Electronics

Charitable Giving

Telecommunication

Specialty

Shipping

Sporting Goods

Restaurants

Media and Entertainment

Occasion and Gifts

Health and Beauty

Transportation

Apparel and Accessories

Department Stores

Children

Travel


COVID impact on Virginia consumer spendingYear-to-date change in total spending, 2019/2020, weeks 1 - 24

11

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RECENT INCREASES IN CONSUMER SPENDING ACTIVITY DRIVEN BY ONLINE SALES IN VIRGINIA, AS IN-STORE TRANSACTIONS STAGNATE

-30

-20

-10

0

10

20

30

40

Week08

Week09

Week10

Week11

Week12

Week13

Week14

Week15

Week16

Week17

Week18

Week19

Week20

Week21

Week22

Week23

Week24

Online

In-store


Growth in Virginia sales transactions by channelYear-over-Year weekly change in transactions, 2019/2020, weeks 8 - 24

12

February March April May June

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OVER 850,000 VIRGINIANS HAVE FILED INITIAL UNEMPLOYMENT CLAIMS SINCE THE BEGINNING OF MARCH

1For Virginia UI numbers, Pandemic Unemployment Assistance (PUA) claims are included in total claims reported

Source: Virginia Employment Commission; VEDP analysis

Weekly UI initial claims1 in VirginiaYTD weekly claims (through June 20, 2020), NSA

13

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1-4 1-18 2-1 2-15 2-29 3-14 3-28 4-11 4-25 5-9 5-23 6-6 6-20 7-4 7-18

Weekly claims Cumulative claims since March

We

ekly

UI cla

ims

Week ending

June 20

Cu

mu

lative

initia

l U

I cla

ims

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CONTINUED CLAIMS HAVE BEGUN TO SLOWLY FALL OVER THE PAST MONTH, EVEN AS WEEKLY INITIAL CLAIMS REMAIN AT HISTORIC HIGHS

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Cumulative weekly claims Continued claims


Source: Virginia Employment Commission

Cumulative UI initial claims1 and continued claims in VirginiaMarch 14 – June 20, 2020, NSA

14

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CLAIMS BY INDUSTRY: THREE INDUSTRIES ACCOUNT FOR THE MAJORITY OF INITIAL UI CLAIMS TIED TO SPECIFIC INDUSTRIES

Numbers doe not add up to cumulative total on previous slides due to data availability issues (e.g. interstate claims)


Source: Virginia Employment Commission; VEDP analysis 15

UI initial claims1 by industryMarch 14 to June 20, 2020, NSA

159,373

104,500

93,690

66,605

46,247

46,198

32,070

28,765

23,826

23,595

22,478

13,451

9,009

8,511

7,368

7,230

3,382

1,151

1,060

193

178,783

Accommodation and food services

Retail trade

Health care and social assistance

Administrative and waste services

Manufacturing

Other services

Professional and technical services

Educational services

Transportation and warehousing

Construction

Arts, entertainment, and recreation

Wholesale trade

Real estate and rental and leasing

Information

Public administration

Finance and insurance

Management of companies and…

Mining

Ag, forestry, fishing and hunting

Utilities

Unknown

18%

12%

11%

8%

5%

5%

4%

3%

3%

3%

3%

2%

1%

1%

1%

1%

<1%

<1%

<1%

<1%

20%

Percentof total

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CLAIMS BY OCCUPATION: UNEMPLOYMENT CLAIMS HAVE BEEN CONCENTRATED IN A HALF DOZEN OCCUPATIONS



Source: Virginia Employment Commission (UI claims); Bureau of Labor Statistics, OES (avg. wages); VEDP analysis 16

UI initial claims1 by occupationMarch 4 to June 20, 2020, NSA

22,290

37,650

28,190

25,040

31,500

126,180

35,720

66,200

27,490

51,400

43,600

55,640

48,650

26,470

78,780

99,170

42,750

47,040

85,550

75,820

89,260

32,610

N/A

Med. wages2019, $

96,834

84,141

74,099

66,920

57,843

57,792

37,563

31,430

31,324

27,397

26,858

24,643

24,131

22,855

17,944

14,812

8,577

8,572

7,323

4,869

3,080

1,742

116,727

Food Prep & Serving

Office & Admin Support

Sales & Related

Personal Care & Service

Transport & Material Moving

Management

Production

Healthcare Pract. & Technical

Healthcare Support

Construction and Extraction

Installation, Maint, & Repair

Arts, Design, Ent, Sports, & Media

Ed Instruction & Library

Building & Grounds Cleaning and Maint

Business & Financial Operations

Computer & Mathematical

Protective Service

Community & Social Service

Architecture & Engineering

Life, Physical, & Social Science

Legal

Farming, Fishing, & Forestry

Unknown

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INITIAL UNEMPLOYMENT CLAIMS HAVE VARIED SIGNIFICANTLY ACROSS VIRGINIA REGIONS



Source: U.S. Department of Labor; BLS Current Population Survey; Emsi 2020.1; VEDP analysis 17

UI initial claims and baseline unemployment as % of baseline jobsMarch 4 to June 20, 2020, NSA, baseline = January 2020

15.5 25.8

State avg

19.0%

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TO DATE, EMPLOYMENT IN VIRGINIA HAS NOT BEEN HIT AS HARD BY COVID-19 AS MOST OTHER STATES

1Does not include Pandemic Unemployment Assistance claims due to inconsistent reporting standards

Source: U.S. Department of Labor; BLS Current Population Survey; Emsi 2020.1; VEDP analysis 18

UI initial claims1 and baseline unemployment as % of baseline jobsMarch 4 to June 20, 2020, NSA, baseline = January 2020

10.7 52.5

US avg

25.4%

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AT PEAK IMPACT IN APRIL, U.S. NONFARM PAYROLL EMPLOYMENT1

DROPPED BY 21.1 MILLION JOBS ON NET FROM JANUARY

3.8

55.0

243.0

258.0

369.0

591.7

962.0

977.0

1,299.0

1,356.0

2,148.7

2,191.0

2,593.0

8,093

Utilities

Mining and logging

Financial activities

Information

Wholesale trade

Transportation and warehousing

Construction

Government

Other services

Manufacturing

Retail trade

Professional and business services

Education and health services

Leisure and hospitality

1 Nonfarm payroll does not include certain categories of workers, like agricultural workers and self-employed

Source: Bureau of Labor Statistics, Current Employment Statistics, May 2020

U.S. job loss by supersectorThousands of jobs, SA, January – April 2020 jobs loss

19

1%

8%

3%

9%

6%

10%

13%

4%

22%

11%

14%

10%

11%

48%

Job loss as a percentageof January 2020 employment

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DURING THAT SAME PERIOD, VIRGINIA BUSINESSES SHED ~430K NONFARM PAYROLL JOBS1 ON NET

0.4

0.8

1.1

1.6

7.3

7.6

10.5

25.4

28.1

48.9

52.1

68.5

181.6

Mining and logging

Information


Wholesale trade

Transportation and utilities

Construction

Manufacturing

Other services

Government

Professional and business services

Retail trade

Education and health services

Leisure and hospitality

1 Nonfarm payroll does not include certain categories of workers, like agricultural workers and self-employed

Source: Bureau of Labor Statistics, Current Employment Statistics, SAE Program, May 2020

Virginia job loss by supersectorThousands of jobs, SA, January – April 2020 jobs loss

20

5%

1%

1%

1%

5%

4%

4%

12%

4%

6%

13%

12%

43%

Job loss as a percentageof January 2020 employment

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MAY JOBS REPORT SHOWED ~2.5M NET JOB GAIN NATIONALLY, SMALLER BUMP IN VIRGINIA WHERE FEWER JOBS HAVE BEEN LOST

115

120

125

130

135

140

145

150

155

Jan2020

Feb2020

Mar2020

Apr2020

May2020


U.S. Nonfarm payroll employmentJanuary – May 2020, millions of jobs, SA

21

75

80

85

90

95

100

105

Jan2020

Feb2020

Mar2020

Apr2020

May2020

US Virginia

U.S. & Virginia nonfarm employment trends in comparisonJanuary – May 2020, SA, indexed to 100

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UNEMPLOYMENT RATES ALSO FELL IN MAY, NATIONALLY AND IN VIRGINIA

-

5

10

15

20

25

Jan2020

Feb2020

Mar2020

Apr2020

May2020

1 Correction of misclassification error for some respondents absent from work due to ‘other reasons’

Source: Bureau of Labor Statistics, Current Population Survey, Local Area Unemployment Statistics, May 2020

U.S. unemployment rateJanuary – May 2020, % labor force unemployed, *NSA*

22

0

5

10

15

20

25

Jan2020

Feb2020

Mar2020

Apr2020

May2020

Unemployment rate (U-3) Corrected rate

Virginia unemployment rateJanuary – May 2020, % labor force unemployed, *NSA*

1

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JOB GAINS WERE PRIMARILY DRIVEN BY REOPENING OF SERVICE SECTOR: LEISURE & HOSPITALITY WAS ~50% OF NET JOB GAIN IN MAY

Leisure & hospitality

+1,239

Construct-

ion

+464

Retail

Trade

+368

Government

-585


Month-on-month U.S. job loss or gain by supersectorChange over previous month, thousands of jobs, SA, April / May 2020

23

Other

Services

+272

Prof & business

services

+127

Manufacturing

+225

-664.4 +3,173

Information

-38

Education

& health

+424

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EVEN AFTER GAINS IN MAY, NATIONAL EMPLOYMENT IN ALL SUPERSECTORS REMAINS BELOW JANUARY 2020 LEVELS

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

Feb2020

Mar2020

Apr2020

May2020

Utilities


Wholesale trade

Government

Construction

Manufacturing

Education & health services

Professional & business services

Transportation & warehousing

Information

Mining and logging

Retail trade

Other services

Leisure & hospitality


U.S. employment change from January 2020 by supersector% change from January 2020 employment, SA

24

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DESPITE OVERALL POSITIVE TRENDS, UNEMPLOYMENT RATES ARE NOT FALLING FOR ALL GROUPS OF WORKERS…

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

Jan-20 Feb-20 Mar-20 Apr-20 May-20

Hispanic/Latino

Black/African American

Asian

White

Source: Bureau of Labor Statistics, Current Population Survey, May 2020

U.S. unemployment rate by race / ethnicityJanuary – May 2020, % labor force unemployed, SA

25

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…AND MOST JOB GAINS IN MAY LIKELY CAME FROM WORKERS ON TEMPORARY LAYOFF, PERMANENT LAYOFFS CONTINUED TO RISE

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan-20 Feb-20 Mar-20 Apr-00 May-20

Not on temporary layoff On temporary layoff

Source: Bureau of Labor Statistics, Current Population Survey, May 2020

Temporary and permanent job losersU.S. unemployed by category, thousands of unemployed, SA

26

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BEYOND THE ~20M STILL UNEMPLOYED NATIONALLY, TENS OF MILLIONS MORE HAVE BEEN NEGATIVELY IMPACTED BY PANDEMIC

1 Change in multiple job-holders between January and May 2020

Source: Bureau of Labor Statistics, Current Population Survey; VEDP analysis

Persons by category Thousands of persons, SA, May 2020

27

Persons actively

seeking employment

5,683

Unemployed In workforce Outside labor force

1

VEDP estimates

28

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AT OUTSET OF CRISIS, VEDP ESTIMATED ROUGHLY 660K-1M JOBS IN VA COULD BE LOST DUE TO DIRECT, INDIRECT, & INDUCED IMPACT

* Assumes additional flexible federal budget support

Source: Emsi 2020.1; VEC UI claims; information from Data Compilation workgroup of Virginia Economic Strike Force; interviews with Virginia businesses and stakeholders; review of national economic forecasts, research, and press; VEDP analysis 29

Sector% of all VA jobs

Number of jobs lost in sector660K to 1M overall

- 100,000 200,000 300,000 400,000

Hospitality & Entertainment 10%

Repair, personal, home svcs. 3%

Employment, admin support svcs. 6%

Real estate, rental & leasing 2%

Retail trade 9%

Transportation & warehousing 3%

Educational Services 2%

Healthcare 7%

Social assistance 4%

Wholesale Trade 3%

Construction 6%

Manufacturing 6%

Waste Mgmt & Remediation 0%

Information 2%

Finance and Insurance 3%

Natural resources & energy 1%

Professional & Business Services 12%

Nonprofit organizations 2%

State & local gov't 12%

All other 0%

Federal gov't 8%

% of jobs lost in sector

0% 25% 50% 75% 100%

Se

ve

re3

2%

Mo

de

rate

45

%

Min

or

23

%

Impact% VA jobs

Low High scenario Low High scenario

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SEVERELY IMPACTED INDUSTRIES REPRESENT TWO-THIRDS OF TOTAL FORECASTED EMPLOYMENT LOSSES

Estimated employment loss by industryRange of estimated job losses in thousands, area based on average of high & low scenarios

Source: Emsi 2020.1; VEC UI claims; information from Data Compilation workgroup of Virginia Economic Strike Force; interviews with Virginia businesses and stakeholders; review of national economic forecasts, research, and press; VEDP analysis

Severe Moderate Minor

30

Hospitality & entertainment

249 - 321

Retail trade

70-109

Repair, personal,

home svcs.

47 – 74

Employment,

admin support

svcs.

51 – 96

Trans. & ware-

housing

22 – 36

Prof & bus.

svcs.

36 – 57

Manufacturing

21 – 34

Fin. &

insur.

12 – 19

Healthcare

41 - 59

Construction

23 – 36

Real estate, rental

& leasing

18 – 25

Social ass.

15 - 29

Ed. Svcs

14 – 23

Whole-

sale

Trade

12 – 19

State & local gov.Non-

profits

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MANY OF THE HARDEST HIT SUB-SECTORS ARE IN LEISURE, HOSPITALITY, RETAIL, AND LOCAL SERVICES INDUSTRIES

31

1 Excludes some small sectors with negligible employment

Source: VEDP analysis

Top ten sub-sectors by expected job loss1,000s of jobs

Top ten sub-sectors by percentage job loss1

% change from baseline

Food services, drinking places

Admin & support svcs

Ambulatory health care svcs

Personal & laundry svcs

Prof, sci, and tech svcs

Amusement, gambling & rec.

Accommodation

Local government

Clothing & clothing accessories

Specialty trade contractors

Perf. arts, spec. sports & related

Miscellaneous store retailers

Motion Picture & Sound Recording

Oil & Gas Extraction

Food Services & Drinking Places

Furniture & Furnishings Stores

Electronics & Appliance Stores

Clothing & Clothing Acce. Stores

Amusement, Gambling, & Rec.

Rental % Leasing Services

236.7

96.4

48.3

42.3

40.5

34.5

32.9

26.6

24.1

23.9

100%

89%

83%

81%

77%

76%

76%

75%

75%

70%

Low High scenario Low High scenario

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POTENTIAL JOB LOSSES VARY BY REGION, LARGELY DUE TO DIFFERENCES IN INDUSTRY MIX (E.G., % OF JOBS IN HOSPITALITY)

Source: VEDP analysis 32

12.5 31.0

Low

14.4%

Statewide

High

22.7%

Estimated jobs lost/furloughed as % of baseline jobsRange of estimated job losses, shading based on average of high and low scenarios

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NOTABLE IMPACTS IN OTHER SUB-SECTORS

33

Sector Outlook

Aquaculture/seafood VA fishing industry has been hit hard and quickly as restaurant orders declined sharply;

demand from consumers through retail channels also fell partly because seafood may be

viewed as a luxury during hard economic times. Many businesses in this sector are small.

Automotive manufacturing Automotive industry was hit earlier and harder than most other manufacturing sectors in

Virginia. The industry is facing collapsing demand for vehicles. High profile layoffs /

suspension of operations include Volvo, Corning (New River Valley).

Tire manufacturing Industry hit by declining demand for automobiles and planes. Goodyear (Danville) and

Yokohama (Salem) both suspended production.

Newspapers Layoffs and furloughs experienced throughout the state due to drop in advertising

revenue, compounding already-existing challenges in the industry. Virginia-based Gannett

and Lee Enterprises both reported furloughs.

Movie production Production crews operating in Virginia and nationally have come to a complete halt,

resulting in numerous layoffs / furloughs.

Commercial banking Financial institutions are seeing surging activity due to the PPP and other programs.

However, staff in branches are facing layoffs and furloughs as foot traffic collapses.

Mining All major coal mines in SWVA shut down temporarily due to health crisis. Coal exports are

already suffering and will likely continue because of strong dollar and declining global

demand.

Nonprofits Nonprofits are struggling to adapt during this time, some experiencing downturn in

donations and others having difficulty implementing programs.

Governments Federal government is not expected to be significantly impacted from an employment

perspective. Due to impact on state & local budgets, however, dozens of localities in

Virginia have instituted temporary furloughs for some non-essential staff.

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NET JOB CREATION (OR ONLY MODEST LOSSES) IS EXPECTED IN A HANDFUL OF INDUSTRIES

34

Sector Outlook

Light trucking, couriers, &

warehousing

The surge on online retail activity is creating significant new demand for last-mile logistics.

Amazon alone has hired over 3,000 new employees in its warehouses in Virginia. VEDP

estimates 10% employment increase in these sectors.

Food and beverage and

general merchandise

stores

Grocery stores, as well as general merchandise stores like Walmart are struggling to keep

up with increasing demand. There have been multiple reports of companies in these

industries hiring in Virginia.

Building material and

garden equipment retail

Home improvement expenses have surged under the quarantine and chains like Home

Depot and Lowes have reported significant hiring in Virginia and across the country.

Online retailers Online retail sales have surged since the beginning of the COVID-19 crisis, significantly

boosting revenue of online retailers. Some job creation is expected in this industry,

although most will be in area of logistics (see above).

Data centers Virginia’s large data center industry stands to benefit from increased online traffic and use

of streaming services in particular. Given the industry is not labor intensive, this will not

equate to significant employment gains, but on-going capital investment likely to continue

unabated.

Quick-service restaurants

(QSRs, i.e., fast food)

While employment is expected to be lost in the fast food industry, industry stakeholder

reports many companies are operating at around 80%, a stark contrast with the full-

service restaurant industry, which has borne the brunt of the impact.

Food, textile, cleaning, and

personal hygiene product

manufacturing

Net job loss is expected across virtually all manufacturing industries, but certain segments

are seeing a surge in demand and offsetting losses. These notably include food

processing, specialty textiles (PPE), cleaning produces, and personal hygiene products

among others. There are reports of manufacturers diversifying into these product

categories.

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VARIOUS ORGS FORECASTING JOB LOSSES ARE USING DIFFERENT MEASURES AND METHODS; VEDP RESULTS LARGELY COMPARABLE

Source: Moody’s Analytics; McKinsey & Company; Weldon Cooper Center at the University of Virginia 35

Important note on VEDP preliminary estimates

▪ VEDP preliminary estimates of 660K to 1M correspond to job loss due to direct, indirect, and induced impacts from COVID-19 pandemic. VEDP does not have forecast of the pace or extent of employment recovery over 2020 Q3 & Q4, so cannot estimate net impact for 2020 – e.g. end-of-year balance of job reductions and additions.

▪ VEDP estimates include payroll jobs covering all sectors, including agriculture, as well as sole proprietors (e.g. self-employed). Most other forecasters present job loss numbers using non-farm payroll, which provide poor or no coverage of the latter categories and may underrepresent full extent of job loss.

Comparison with other forecasts

▪ Moody’s May Virginia forecast projects approximately 474K payroll non-farm jobs lost peak to trough (January 31 and May 31), with employment still down 280K jobs on net December 31.

▪ McKinsey & Company analyzed employment by occupation and determined that a total of 1.3M Virginia jobs were ‘vulnerable’ to layoff, hour, or wage reduction.

▪ Dynamic modelling conducted by UVA’s Weldon Cooper Center projects payroll non-farm job losses ranging from 300K to 500K on net in 2020, based on scenarios ranging from 2% to 6% GDP contraction, respectively. However, Weldon Cooper has not estimated max job losses at peak.

Appendix

36

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DATA SHARED BY DATA WORKGROUP MEMBERS AND STATUS

37

Agency

Industry/area Data and information provided

In forecast

DHCD

Small

businesses

Provided:

■ National and Virginia-specific results from survey of small businesses (National Main Street Association)

■ Qualitative information from check-in calls with small businesses

Available later:

■ Follow up survey of national and Virginia small businesses (National Main Street Association) – end of

April

DOF

Wood Products

Provided:

■ Qualitative outlook on sector, related press coverage

■ Online resources on forest-related industry impact

Available later:

■ DOF survey of forest-related – by April 17

Marine

Products

Board/VDACS

Seafood - Food

& Beverage

Provided:

■ Stats on commercial and recreational fisheries and aquaculture jobs, demand, revenue loss in VA

■ Qualitative information about steps taken by industry, impact, concerns, and outlook for commercial and

recreational fisheries

■ Number of recreational fisheries jobs in VA: 5,893

SBFA (SBSD)

Financial

services / small

businesses

Provided:

■ Results from survey of Virginia small businesses on impacts of COVID-19

■ Data on VA SBFA loans applications for payment deferrals and term extensions; trends in COVID loan

requests; and economic impact of concessions

■ Information about banks seeking economic relief for loans guaranteed by SBFA

Available later:

■ Updated stats on VA SBFA loans trends and performance

SCHEV

Higher ed

Provided:

■ Enrollment by institution

Available:

■ Institution-level data on admissions, enrollment, retention and graduation, tuition and fees, student debt

■ VLDS

✓

✓

✓

✓

✓

38NO

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DATA SHARED BY DATA WORKGROUP MEMBERS AND STATUS (CONTINUED)

38

Agency

Industry/area Data and information provided

In forecast

Secretary of

Education,

Workforce

Advisor

Workers

Provided:

■ Access to COVID-19 dashboard that illustrates jobs impacted, UI claims, and socio-economic

characteristics of impacted workers

Available later:

■ Automation risk scores to assess which jobs may not come back after crisis

TAX

Overall

economy

Data provided:

■ IHS Markit national economic forecast

In progress:

■ Virginia’s economic forecast (certain component)

Available at later date:

■ Quarterly notebook

■ Income tax withholdings (late April)

■ Sales and use tax collections by source (May)

VCCS

Higher Ed

Provided data:

■ Registrations for unemployment services

■ Profile of individuals registering for unemployment services and trends (demographic, occupational,

etc.)

In progress:

■ Drill-down into unemployment services registrations

■ Community college enrollment in credit and non-credit courses

VDOT

Transportation

In progress:

■ Current traffic volume

■ Motor vehicle sales

■ Transit ridership

■ Passenger volumes at air carrier airports

✓

✓

✓

✓

39NO

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DATA SHARED BY DATA WORKGROUP MEMBERS AND STATUS (CONTINUED)

39

Agency

Industry/area Data and information provided In forecastVEC

Workers

Provided

■ Weekly UI claims by locality and industry

■ Demographics profile of claimants

In progress:

■ Weekly UI claims by occupation, by employer NAICS

VHDA

Mortgage –

Financial services

Provided:

■ Trends in loans forbearance requests

■ Volume of loans in forbearance

■ Servicer call center volume

■ Trends in new home purchase loan requests

■ Trends in rental housing market

■ Results from survey of VA realtors on home buyer and seller interest and behavior

VTC

Tourism

Provided:

■ Findings from Virginia-specific study of economic impact

■ Findings from national study of economic impact due to travel losses

■ National and Virginia trends in weekly travel spending

■ Results from VTC industry survey on traveler sentiment in VA

■ Summary of results from other industry national surveys on traveler sentiment

■ Hotel closures

■ Weekly trends in hotel occupancy and rates in US, VA, and major VA metros

Available later:

■ Study of economic impact in Virginia’s 10 tourism regions

■ VA tax revenue impact

■ Jobs and wages impacted or lost

✓

✓

✓

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133,373

76,713169,97

666,378

56,625110,99

881,727

61,135

64,561134,52

860,458

58,760

17,988

77,423

27,337

5,214

69,430166,88

423,490

PPP FUNDING USED BY A WIDE RANGE OF INDUSTRIES, NOT JUST THOSE MOST SEVERELY IMPACTED (NATIONWIDE)1

1 Excludes amounts for unclassified and unknown industries (234K loans amounting to $11.6B)

Source: U.S. Small Business Administration, loan approvals through June 20, 2020; Bureau of Economic Analysis; Bureau of Labor Statistics; VEDP analysis

Loan amounts approvedby industry ($M)

40

Loan approvals per M$ in industry GDP ($)

Loan approvals per M$ in industry payroll ($)

Se

ve

reM

od

era

teM

inor

41,498

39,908

30,514

26,167

16,605

15,329

7,801

4,473

66,583

63,922

53,621

27,515

12,034

11,829

9,135

1,570

65,621

7,726

1,459

Acc & Food Services

Retail Trade

Other Services

Admin Support & Waste Mgmt

Transp & Warehousing

Real Estate & Rental

Arts, Ent, & Rec

Mining, Quarrying, & O&G

Health Care & Social Ass

Construction

Manufacturing

Wholesale Trade

Finance & Insurance

Educational Services

Information

Management of Companies

Prof, Scientific, & Tech Svcs

Ag, Forestry, Fishing & Hunting

Utilities

69,005

35,446

78,921

40,663

24,572

19,881

35,147

12,392

42,602

73,740

22,524

22,302

6,895

44,754

8,232

3,901

41,242

44,796

4,352

41NO

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WITH $514B IN PPP LOANS DISBURSED AS OF JUNE 20, VIRGINIA HAS FARED RELATIVELY WELL AMONG OTHER LARGE STATE ECONOMIES1

1 Cumulative totals for PPP round 1 & round 2 through June 20, 2020

Source: U.S. Small Business Administration, loan approvals through June 20, 2020; VEDP analysis 41

Loan totals approvedfor selected states ($M)

Loan approvals per M$ in state private sector GDP ($)

Loan approvals per M$ in state private sector payroll ($)

67,152

40,535

37,764

31,243

20,555

15,812

14,199

14,163

12,481

12,293

12,152

9,901

8,817

California

Texas

New York

Florida

Pennsylvania

Michigan

Massachusetts

Georgia

Virginia

North Carolina

Washington

Maryland

Tennessee

24,095

23,945

24,357

32,029

27,940

32,659

26,379

25,998

27,518

24,033

23,177

28,937

26,063

63,441

63,290

61,917

79,350

69,233

76,814

58,921

66,485

65,409

62,452

61,698

74,923

65,487

42NO

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DEGREE OF IMPACT ON VIRGINIA WORKERS LIKELY TO VARY SIGNIFICANTLY DEPENDING UPON SOCIO-ECONOMICS

Source: American Community Survey, public use microdata, 2018; VEDP analysis 42

Lower-wage workers disproportionately representedin severe-impact sectors % of workers by income group

0% 50% 100%Severeimpact

Moderateimpact

Minorimpact

Less than $30,000 More than $30,000

Severe

impact

Moderate

im

% of all workers < $30K

Minority workers slightly more heavily represented in severe-impact sectors% of workers by ethnic group

0% 50% 100%

Severe

Moderate

Minor

All Workers

White African-American Asian Other

Severe impact

Mod. impact

Minor impact

All sectors

Sectors

experiencing

Genders equally represented in severe-impact sectors % of workers by gender

0% 50% 100%

Severe

Moderate

Minor

Female Male

Severe

impact

Moderate

impact

Minor

impact

Females as % of all workers

Workers without college degrees disproportionately represented in severe-impact sectors% of workers by educational attainment

0% 50% 100%

Severe

Moderate

Minor

Less than Bachelor's Bachelor's and above

Severe

impact

Moderate

impact

Minor

impact

Sectors

experiencing

% of all workers

< Bachelor’s

Sectors

experiencing

Severe impact

Mod. impact

Minor impact

Severe impact

Mod. impact

Minor impact

Severe impact

Mod. impact

Minor impact

Sectors

experiencing

43NO

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SMALL EMPLOYERS REPRESENT VAST MAJORITY OF FIRMS & HALF OF EMPLOYMENT, HIGHLY CONCENTRATED IN CERTAIN SECTORS

52.8%

5.5%

14.6%

9.2%

17.9%

500+ employees

250 - 499 employees

50 - 249 employees

20 - 49 employees

0 - 19 employees

0% 50% 100%

Ag., forestry, fishing

Construction

Other services

Arts, ent., & rec

Educational services

Real estate & leasing

Mining, quarrying, O&G

Acc. & food services

Prof., scientific, & tech svcs.

Health care & social ass.

Wholesale trade

Admin support & waste mgmt

Manufacturing

Retail trade

Trans & warehousing

Information

Finance and insurance

Mgmt of companies

Utilities

Less than 500 workers More than 500 workers

Source: Census; LEHD; Quarterly Workforce Indicators; Census Bureau, Business Dynamics Survey; VEDP analysis

Employment by firm sizeVirginia, 2017

Employment by firm size, by industryVirginia, 2017

43

47% of

employment

0.4%

0.4%

3.7%

7.7%

87.8%

500+ employees

250 - 499 employees

50 - 249 employees

20 - 49 employees

0 - 19 employees

Firm count by firm sizeUnited States, 2016

Overall for businesses

with less than 500

Admin Support & Waste Mgmt

44NO

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SMALL BUSINESSES (< 500 JOBS) DISPROPORTIONATELY FOUND IN SEVERELY- AND MODERATELY-IMPACTED SECTORS

55%

64%

39%

45%

36%

61%

0% 50% 100%

Severe impact

Moderate impact

Minor impact

Less than 500 jobs 500 or more jobs

Source: Emsi 2020.1; Census Bureau LEHD; VEDP analysis

Jobs in small vs. large firms in sectors withsevere, moderate, or minor impact from COVID-19% of jobs, 2019

44

Overall for businesses

with less than 500 jobs

Sectors

experiencing

45NO

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FINDINGS FROM THE GREAT RECESSION: SMALL BUSINESS SECTOR MORE NEGATIVELY IMPACTED, SLOWER TO RECOVER

86.0

88.0

90.0

92.0

94.0

96.0

98.0

100.0

102.0

104.0

2008 2009 2010 2011 2012 2013 2014

88.0

90.0

92.0

94.0

96.0

98.0

100.0

102.0

104.0

2008 2009 2010 2011 2012 2013 2014

Source: U.S. Census Bureau, Business Dynamics Statistics; VEDP analysis

Employment change by firm sizePayroll workers on 3-12 each year, 2008 - 2014, indexed

Firm count change by firm size2008 - 2014, indexed

45

Micro-business (<5) 5 – 499 employees 500+ employees

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FINDINGS FROM THE GREAT RECESSION: SMALL BUSINESSES ACCOUNTED FOR 1/2 OF U.S. JOBS, BUT ~70% OF NET JOB LOSSES

12,802

9,325

10,777

15,435

12,427

10,887

6,807

6,687

3,142

2,694

6,203

10,098

1 - 4

5 - 9

10 - 19

20 - 49

50 - 99

100 - 249

250 - 499

500 - 999

1,000 - 2,499

2,500 - 4,999

5,000 - 9,999

10,000+


Job loss by firm sizeNet jobs loss by firm size, total net job loss = 107,284 , 2009

46

73% of net

job loss in

2009

0 - 499 employees 500+ employees

47NO

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FINDINGS FROM THE GREAT RECESSION: VIRTUALLY ALL BUSINESS CLOSURES IN 2009 WERE FIRMS WITH FEWER THAN 500 EMPLOYEES

10,637

882

371

153

35

20

6

4

2

1 - 4

5 - 9

10 - 19

20 - 49

50 - 99

100 - 249

250 - 499

500 - 999

1,000 - 2,499

2,500 - 4,999

5,000 - 9,999

10,000+


Business closures by sizeNumber of firms, total firm deaths = 12,110, 2009

47

99.99% of

firms closed

in 2009

0 - 499 employees 500+ employees

48NO

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ECONOMIC ACTIVITY ACROSS LARGE SWATHS OF THE ECONOMY HAS HALTED; CONSUMER CONFIDENCE HAS PLUMMETED

Source: OpenTable; Transportation Safety Administration; Box Office Mojo; University of Michigan; VEDP analysis 48

OpenTable reservations Online reservations

Passengers passing through TSA checkpoints1,000s of passengers

Weekly box office resultsTop 10 gross, M$

0

50

100

150

200

250

0

50

100

150

200

250

0

500

1,000

1,500

2,000

2,500

3,000

40

60

80

100

120

Univ. of Michigan Consumer Confidence Index100 = 1996

Virginia

Feb 20 Mar 20 Apr 20Jan 20 May 20

Feb 20 Mar 20 Apr 20Jan 20 May 20 Feb 20 Mar 20 Apr 20Jan 20 May 20

Feb 20 Mar 20 Apr 20Jan 20 May 20

49NO

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THREE PHASES OF ECONOMIC IMPACT AND RECOVERY

49

3,500,000

3,750,000

4,000,000

4,250,000

4,500,000

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

Epidemiological

apex

Containment

measures drive

spike in job loss

Impacts up supply chain

and diminished consumer

spend start to generate

indirect / induced impact

Progressive re-opening of

economy: net positive job

creation, but company

fatalities & lingering impact

Residual indirect, induced

impact slowly work their

through the economy;

slow ramp up to initial job

levels

N N+1 N+4 N+7

Economic

apex

Initial

recoveryLong-term

recovery

▪ Estimates of short-term direct impact based on

stakeholder input and monitoring economic news

& indicators

▪ First-take analysis of indirect / induced impact

using IMPLAN

▪ Analysis of impacted industries’ demographics

▪ Monitoring / analysis of fiscal / monetary measures

and impacts / gaps

▪ Refine understanding and update ‘damage report’

▪ Work with Weldon Cooper on dynamic modeling

▪ VEDP monitoring of economic indicators and

maintaining dialogue with stakeholders

▪ Continued monitoring of policy measures, impacts,

gaps

1 2 34.50M

4.25M

4.00M

3.75M

3.50M

Months

Source: VEDP analysis

50NO

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PRELIMINARY, PREDECISIONAL, DRAFT PERSPECTIVE OF MCKINSEY ON STATE/LOCAL STRATEGIES FOR REOPENING

Source: McKinsey & Company, “Winning the (local) COVID-19 war” 50

Winning the (local) Winning

the (local) COVID-19 war

COVID-19 warWinning the (local) Winning the (local) COVID-19 war

COVID-19 war

51NO

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EXCERPT FROM MCKINSEY U.S. CONSUMER SENTIMENT SURVEY CONDUCTED 4/6-4/12 (NATIONAL PERSPECTIVE)

Documents

COVID-19 IN VIRGINIA: ECONOMIC IMPACT ASSESSMENT...3.1 3.3 3.5 3.7 3.9 4.1 4.3 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3