2018 Annual Economic ForecastDragas Center for Economic Analysis and Policy

PRESENTING SPONSOR

EVENT PARTNERS

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The forecasts and commentary do not constitute an official viewpoint of Old Dominion University, its President, John R. Broderick, the Board of Visitors, the Strome College of Business, or the generous donors who support the activities of the Dragas Center for Economic Analysis and Policy and the Economic Forecasting Project.

2018 Hampton Roads Economic Forecast

Stagnant Growth,Improving Future?

Professor Vinod AgarwalJanuary 31, 2018

2018 Hampton Roads Economic Forecast

Stagnant Growth,Improving Future?

Professor Vinod Agarwal

January 31, 2018

1.62%2.17%

1.49%

2.25%2.12%

-0.04% -1.09%

0.80%

-2%

-1%

0%

1%

2%

3%

2001 to 2009 2009 to 2015 2015 to 2016 2016 to 2017e

Annual Growth Rate in Real GDPHampton Roads and the United States

United States Hampton Roads

Source: Bureau of Economic Analysis and the Old Dominion University Economic Forecasting Project. Data on GDP incorporates latest BEA revisions in September

2017. US GDP is advance estimate while Hampton Roads GDP is our estimates.

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Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Peak employment for the United States was January 2008, Virginia was April 2008, and Hampton Roads was July 2007. Seasonally adjusted data through December 2017 (US and VA) and November 2017 (HR). Last month of data are preliminary. Data measure number of reported jobs.

6.47%

4.69%

-2.25%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%1 5 9

13

17

21

25

29

33

37

41

45

49

53

57

61

65

69

73

77

81

85

89

93

97

10

1

10

5

109

11

3

11

7

121

Months Since Pre-Recession Peak

Monthly Job Growth From Pre-Recession Peak Employment

Hampton Roads, Virginia and United States, 2008-2017

United States Virginia Hampton Roads

Defense Spending in Hampton Roads

$522

$574

$584 $581

$490

$500

$510

$520

$530

$540

$550

$560

$570

$580

$590

DoD Budget

Control Act Cap

POTUS Request House

Appropriations

Senate

Appropriations

Bill

ion

s o

f D

olla

rsDoD Base Budget Cap, Request, and Appropriations BillsFiscal Year 2018

Sources: Budget Control Act of 2011, FY 2018 Presidential Budget Request, U.S. House of Representatives and U.S. Senate

Source: U.S. Department of Defense and the Old Dominion University Economic Forecasting Project. *Includes Federal Civilian and Military Personnel and Procurement. Data for 2016 are estimates and data for 2017 are forecasts.

10.0

19.5 19.2 19.6

0.0

5.0

10.0

15.0

20.0

25.020

00

20

01

20

02

2003

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

2015

20

16

20

17

Billio

ns

of

Do

lla

rsEstimated Direct DoD SpendingHampton Roads, 2000 to 2017

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Estimated Average Compensation Hampton Roads, Selected Categories

10

2015 2016Change in

Compensation

Military $91,561 $92,189 0.69%

Federal Civilian Govt. Employees

$107,322 $109,624 2.15%

State and Local Govt. Employees

$62,602 $64,164 2.49%

Private Nonfarm $42,189 $41,751 -1.04%

Source: Bureau of Economic Analysis and Old Dominion University Economic Forecasting Project. Compensation includes wages, salaries, and benefits.

Where are the jobs?

706.6

775.5

737.1

771.8 769.4

660

680

700

720

740

760

780

800

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Tho

usa

nd

s o

f Jo

bs

Average Annual Civilian Jobs

Hampton Roads, 1999-2017

Source: U.S. Department of Labor CES data and the Old Dominion University Economic Forecasting Project. Not seasonally adjusted. Data will be revised in March 2018

Source: Virginia Employment Commission: Covered Employment and Wages by Private Ownership and the Old Dominion University Economic Forecasting Project.

-11

-7

-6

-5

-5

-4

-3

-2

-1

1

1

1

4

19

-15 -10 -5 0 5 10 15 20 25

Construction

Manufacturing

Retail Trade

Wholesale Trade

Information

Real Estate

Admin and Support

Finance and Insurance

Utilities

Management of Companies

Professional and Scientific

Transportation and Warehousing

Accomodation and Food

Health Care and Social Assistance

Change in Private Sector Employment

Selected Industries in Hampton Roads, 2007 Q1 to 2017 Q1

746

827

846835 838

660

680

700

720

740

760

780

800

820

840

860

Tho

usa

nd

s o

f In

div

idu

als

Civilian Labor Force

Hampton Roads, 1999-2017

Source: U.S. Department of Labor LAUS data and the Old Dominion University Economic Forecasting Project. Not seasonally adjusted. Data will be revised in March/April 2018

721

792797 796

803

660

680

700

720

740

760

780

800

820

Tho

usa

nd

s o

f In

div

idu

als

Number of Individuals Employed

Hampton Roads, 1999 to 2017

Source: U.S. Department of Labor LAUS data and the Old Dominion University Economic Forecasting Project. Not seasonally adjusted. Data will be revised in March/April 2018

Source: Bureau of Labor Statistics Seasonally adjusted data and the Old Dominion University Forecasting Project. Preliminary data: US and VA (Dec 17) and HR (Nov 17). Hampton Roads data only through November 2017.

4.1%

3.7%

4.3%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

Ja

n-0

7

Ma

y-0

7

Se

p-0

7

Ja

n-0

8

Ma

y-0

8

Se

p-0

8

Ja

n-0

9

Ma

y-0

9

Se

p-0

9

Ja

n-1

0

Ma

y-1

0

Se

p-1

0

Ja

n-1

1

Ma

y-1

1

Se

p-1

1

Ja

n-1

2

Ma

y-1

2

Se

p-1

2

Ja

n-1

3

Ma

y-1

3

Se

p-1

3

Ja

n-1

4

Ma

y-1

4

Se

p-1

4

Ja

n-1

5

Ma

y-1

5

Se

p-1

5

Ja

n-1

6

Ma

y-1

6

Se

p-1

6

Ja

n-1

7

Ma

y-1

7

Se

p-1

7

Headline Unemployment Rate (U3)

Hampton Roads, Virginia, and United States

January 2007-December 2017*

United States Virginia Hampton Roads

Residential Housing is Looking Up

$1,338

$551

$978

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

19

91

1992

19

93

19

94

19

95

19

96

19

97

19

98

1999

20

00

20

01

20

02

20

03

20

04

20

05

2006

20

07

20

08

20

09

20

10

20

11

20

12

20

13

2014

20

15

20

16

20

17

Millio

ns

of

Do

lla

rsValue of Building Permits for One-Unit Family Homes

Hampton Roads, 1991-2017

Source: U.S. Bureau of the Census and the Old Dominion University Economic Forecasting Project

14,703

23,492

2,2653,228

0

5,000

10,000

15,000

20,000

25,000

2010 2011 2012 2013 2014 2015 2016 2017

Existing and New Construction Home Sales

Hampton Roads, 2010-2017

Existing Homes New Construction

Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information Deemed Reliable But not Guaranteed. Figures reported here

represent only those properties that are listed through REIN by REIN members and may not represent all new construction activity in our region.

15.8%

49.0%

29.0%

4.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2002 2004 2006 2008 2010 2012 2014 2016

Distribution of New Construction Home Sales by Financing Type

Hampton Roads, 2000-2017

FHA VA Conventional Cash

Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information Deemed Reliable But not Guaranteed.

$116,900

$223,000 $180,000

$219,000

$0

$50,000

$100,000

$150,000

$200,000

$250,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Median Sales Price of Existing Homes

Hampton Roads, 2002-2017

Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information deemed reliable but not guaranteed. 2002-2007 = 91% increase. 2011-2017 is a 22% increase.

Median Sale Price of Existing Residential Homes for Selected

Cities in Hampton Roads: 2007 and 2017

22Source: Real Estate Information Network and Old Dominion University Economic Forecasting Project. Information Deemed Reliable But not Guaranteed. * Williamsburg represents Williamsburg, James City County, York County and Gloucester County. ** Median price in Suffolk peaked in 2006 at $263,950

CityMedian Price

2007

Median Price

2017% change

Chesapeake $250,100 $245,000 -2.0%

Norfolk $195,000 $183,500 -5.9%

Portsmouth $165,500 $140,000 -15.4%

Suffolk** $257,500 $240,000 -6.8%

Virginia Beach $245,000 $247,500 +1.2%

Hampton $180,000 $155,000 -13.9%

Newport News $199,250 $170,000 -14.7%

Williamsburg* $284,450 $283,000 -0.5%

Hampton Roads $223,000 $219,000 -1.8%

0.2%

7.1%

3.6%1.2%

26.6%

8.4%

0%

5%

10%

15%

20%

25%

30%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Short Sales and Bank-Owned Sales as Percent of Total Sales

Hampton Roads, 2006-2017

Short Sales REO Sales

Hotel Industry

$520.2

$708.3$645.3

$803.1$841.6

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

2000 2002 2004 2006 2008 2010 2012 2014 2016

Mill

ion

s o

f D

olla

rsHotel Revenue in Hampton Roads

2000-2017

Source: STR Global and Old Dominion University Economic Forecasting Project.

4.9%

3.9%

4.8%

3.0% 2.9%

4.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

United States Virginia Hampton Roads

Growth in Hotel Revenue and Revenue Per Available Room

United States, Virginia, and Hampton Roads, 2016-2017

Hotel Revenue Revenue per Available Room

0.16%

4.15%

14.43%

3.85%

5.81%

4.80%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Williamsburg Market

Virginia Beach

Norfolk/Portsmouth

Newport News/Hampton

Chesapeake/Suffolk

Hampton Roads

Growth in Hotel Revenue

Hampton Roads, 2016 to 2017

Source: STR Trend Report, January 17, 2018, and the Old Dominion University Economic Forecasting Project. Williamsburg Market includes James City County, York County, and City of Williamsburg.

Source: Aidna (2018) market data adjusted by Dragas Center for Economic Analysis and Policy. Excludes shared rooms

$0.42

$2.16

$5.88

$0

$1

$2

$3

$4

$5

$6

$7

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

Millio

ns

of

Do

lla

rsMonthly Airbnb Revenue in Hampton Roads

2015-2017

2015 2016 2017

Port of Virginia: Growing rapidly

17.8318.84

21.97

0

5

10

15

20

25

2000 2002 2004 2006 2008 2010 2012 2014 2016

Millio

ns

of

Ton

sGeneral Cargo Tonnage

Port of Virginia, 2000-2017

Source: Virginia Port Authority and Old Dominion University Economic Forecasting Project.

1,348

2,128

1,745

2,224

2,841

0

500

1,000

1,500

2,000

2,500

3,000

2000 2002 2004 2006 2008 2010 2012 2014 2016

Tho

usa

nd

s o

f TE

Us

Twenty Foot Equivalent Container Units (TEUs)

Port of Virginia, 2000-2017

Source: Virginia Port Authority and Old Dominion University Economic Forecasting Project.

0.330.39

0.43 0.45 0.480.55 0.57

0.770.82 0.84

0.930.98 0.95

1.04

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2011 2012 2013 2014 2015 2016 2017

Millio

ns

of C

on

tain

ers

Movement of Containers by Type of Transportation

Port of Virginia, 2011-2017

Rail Barge & Truck

33

1,158 1,2011,307 1,341

1,4101,514

1,798

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2011 2012 2013 2014 2015 2016 2017

Nu

mb

er

of

TEU

sAverage TEUs per Container Vessel Call

Port of Virginia, 2011-2017

Source: Virginia Port Authority and the Old Dominion University Economic Forecasting Project.

34

2017 Forecast 2017 Actual 2018 Forecast

Hampton Roads

Real Gross Domestic Product

Initial Forecast

1.4% -- --

Hampton Roads

Real Gross Domestic Product

Mid-year revision

0.8% -- 1.2%

Civilian Job Growth 0.5% -0.3% 0.5%

Unemployment Rate 4.3% 4.3% 3.9%

Taxable Sales 2.6% 3.0% 3.0%

Hotel Revenue 4.4% 4.8% 3.9%

General Cargo Tonnage 2.7% 5.3% 2.8%

One Unit Housing Permit Value 2.6% 8.5% 2.4%

Source: 2017 data reflects the annual rate of growth, last month, or day business day of 2017 where appropriate.

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