2018 Midyear Economic Forecast DRAGAS CENTER FOR ECONOMIC ANALYSIS - - PowerPoint PPT Presentation

2018 Midyear Economic Forecast

DRAGAS CENTER FOR ECONOMIC ANALYSIS AND POLICY

PRESENTING SPONSOR

MEDIA SPONSORS

OTHER SPONSORS

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,

• r the generous donors who

support the activities of the Dragas Center for Economic Analysis and Policy.

The data in this presentation are subject to revision. To our knowledge, all data in this presentation are accurate at the time of the presentation.

Current and Historical Expansions

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Expansion Duration In months Annual Employment Growth Annual Real GDP Growth October 1949 – July 1953 45 4.35% 6.14% May 1954 – August 1957 39 2.51% 3.67% April 1958 – April 1960 24 3.58% 4.86% February 1961 – December 1969 106 3.23% 4.68% November 1970 – November 1973 36 3.38% 4.60% March 1975 – January 1980 58 3.51% 4.01% December 1982 – July 1990 91 2.81% 3.81% March 1991 – March 2001 120 2.01% 3.45% November 2001 – December 2007 73 0.88% 2.66% June 2009 – Present* 106 1.41% 2.16%

Source: Bureau of Labor Statistics, Bureau of Economic Analysis, National Bureau of Economic Research, and Old Dominion University Economic Forecasting Project. Real GDP in chained 2009 dollars. CAGR = Compound Annual Growth Rate. Annual Real GDP CAGR derived from quarterly series. Annual employment CAGR derived from monthly series. Current expansion data ends in 2018 Q1 for GDP and March 2018 for Employment. Average annual Real GDP CAGR of previous expansions = 4.21% while average annual employment CAGR from previous expansions = 2.92%. Next update is May 30th, 2018.

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1.2% 3.1% 3.2% 2.9% 2.3% 0.8% 2.8% 3.7% 2.5% 2.2%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1

Growth in Real Gross Domestic Product United States and Virginia, 2010 - 2018 Q1

United States Real GDP Virginia Real GDP

Source: Bureau of Economic Analysis and Old Dominion University Economic Forecasting Project. Real GDP measured in chained 2009 dollars. U.S. 2018 Q1 and Virginia 2017 Q4 are advance estimates. VA 2018 Q1 is our forecast. Quarterly numbers are annualized rates of growth. Next update: US (May 30, 2018) and Virginia (July 24, 2018).

129,726 148,424

120,000 125,000 130,000 135,000 140,000 145,000 150,000 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Thousands of Jobs

Total Nonfarm Employment United States, January 2007 – April 2018

Source: Bureau of Economic Analysis and Old Dominion University Economic Forecasting Project. Seasonally adjusted data. Data for March and April 2018 are preliminary. Trough was February 2010. Next update: June 1, 2018

+ 18.70 Million Jobs

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3,596 3,987

3,400 3,500 3,600 3,700 3,800 3,900 4,000 4,100 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Thousands of Jobs

Total Nonfarm Employment Virginia, January 2007 – March 2018

Source: Bureau of Economic Analysis and Old Dominion University Economic Forecasting Project. Seasonally adjusted data. Data for March 2018 are preliminary. Trough was February 2010. Next update: May 18, 2018

+ 391,100 Jobs

7

8

7.23% 5.24%

• 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 97 101 105 109 113 117 121

Recovery from the Great Recession Measured in Total Jobs Restored, 2008-2018*

United States Virginia

Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Peak Pre-Recession Dates are January 2008 (United States) and April 2008 (Virginia). *Data for USA through April 2018, Virginia through March 2018. US data preliminary for March and April 2018. Virginia data preliminary for March 2018. Data from Current Employment Statistics. Seasonally adjusted data.

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5.86% 4.94%

• 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 97 101 105 109 113 117 121 125

Recovery from the Great Recession Measured in Individual Employment, 2007-2018*

United States Virginia

Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Peak Pre-Recession Dates are November 2007 (United States) and July 2008 (Virginia). *Data for USA through April 2018, Virginia through March 2018. US data preliminary for March and April 2018. Virginia data preliminary for March 2018. Current Population Survey data. Seasonally adjusted data.

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2.9% 3.4% 4.6% 3.9%

0% 2% 4% 6% 8% 10% 12% Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18

Headline Unemployment Rate (U3) Virginia and United States, 2007 – 2018

Virginia United States

Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Seasonally adjusted unemployment rates. Virginia data through March 2018 while US data through April 2018. Next update: US: June 1, 2018 and Virginia: May 18, 2018

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10.1% 8.2% 16.7% 8.3% 6.8% 6.0% 12.9% 7.6%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Alternative Measure of the Unemployment Rate (U6) Virginia and the United States, 2003 – 1st Quarter 2018

United States Virginia

Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. U-6 measures total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers. State level data based on 4-quarter moving average. Annual averages are presented. Next update: July 27, 2018.

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1.12 6.65 1.01

1 2 3 4 5 6 7

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Unemployed/Job Openings

Number of Unemployed Individuals per Job Opening United States, January 2001 to March 2018

Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Seasonally adjusted data. Next update: June 5, 2018.

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8.51% 6.52%

0% 2% 4% 6% 8% 10% 12% 1950 1952 1954 1957 1959 1962 1964 1966 1969 1971 1974 1976 1979 1981 1983 1986 1988 1991 1993 1995 1998 2000 2003 2005 2008 2010 2012 2015 2017

Corporate Profits as Percent of GDP United States, 1st Quarter 1950 – 4th Quarter 2017

Source: Bureau of Economic Analysis and Old Dominion University Economic Forecasting Project. Corporate Profits After Tax Without Inventory Adjustment

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32.6 44.2 31.3 16.9

5 10 15 20 25 30 35 40 45 50 1881 1884 1888 1892 1896 1900 1904 1907 1911 1915 1919 1923 1927 1930 1934 1938 1942 1946 1950 1953 1957 1961 1965 1969 1973 1976 1980 1984 1988 1992 1996 1999 2003 2007 2011 2015

Cyclically Adjusted Price/Earnings Ratio Standard and Poor’s Composite Price Index January 1881 – May 2018*

Source: Robert Schiller, Irrational Exuberance. Prices and earnings are in January 2000 dollars. Data as May 1, 2018 market close. For further information: http://www.econ.yale.edu/~shiller/data.htm

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184.55 197.01

50 100 150 200 250 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015 2016 2017

S&P Case-Shiller Home Price Index United States, January 1987 – February 2018

Source: S&P Dow Jones Indices, LLC. Seasonally adjusted series. January 2000 = 100.

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• 11.9%

6.7% 48.1%

• 30%
• 20%
• 10%

0% 10% 20% 30% 40% 50% 60%

Case-Shiller Home Price Index Change from Pre-Recession Peak to February 2018

Source: S&P Dow Jones Indices, LLC. Seasonally adjusted series. January 2000 = 100.

17

68.38 129.88

20 40 60 80 100 120 140 160 January 2000 = 100

New Residential Construction Single Unit and Units in Buildings with 5 Units or More United States, January 2000 – March 2018

Single Unit Housing 5 or More Units

Source: U.S. Bureau of the Census and Old Dominion University Economic Forecasting Project. Seasonally adjusted data. Annual rate. Next update: May 16, 2018. January 2000 = 100.

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89% 12% 68%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Cash Out Refinance Activity United States, 1st Quarter 1994 – 1st Quarter 2018

Source: Freddie Mac, Quarterly Refinance Statistics, 1st Quarter 2018. Percentage of refinances refers to loan amounts that were at least 5 percent higher than the amortized unpaid principal balance of the original loan.

Federal Spending Provides a Short- Term Boost

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$636 $651 $525

2018 CR 2018 Request 2018 BBA 2019 Request $470 $490 $510 $530 $550 $570 $590 $610 $630 $650 $670 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Billions of Nominal Dollars

Department of Defense Base Budget FY 2011 – FY 2019

FY 2011 Enacted with Inflation Original BCA Caps Prior BBA Caps

Source: BCA2011,Budget Requests for FY 18 and FY 19, CBO Sequestration Update Report, Various Years, and the Old Dominion University Economic Forecasting Project. FY 2011 Actual and FY 2012 Proposed Budget and FYDP. FY 18 and FY 19 are inflated from the FY12 FYDP estimate of FY17.

21 528 528 530 495 496 497 521 523 590 617 681 694 707 722 163 159 115 82 85 63 59 82 65.2 69 20 20 20 20

$691 $687 $645 $577 $581 $560 $580 $605 $655 $686 $701 $714 $727 $742 $0 $100 $200 $300 $400 $500 $600 $700 $800 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Billions of Nominal Dollars

Department of Defense Discretionary Budget Authority, FY 2010 – FY 2023

DoD Base Budget Overseas Contingency Operations

Source: U.S. Department of Defense and the Old Dominion University Economic Forecasting Project. FY 2019 Budget Materials. FY 18 base budget includes $5 billion in missile defense authority. Nominal dollars.

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FY 18 Approved Units FY 18 Approved $ Billions FY 19 Request Units FY 19 Request $ Billions Aircraft F-35 Joint Strike Fighter 90 $11.8 77 $10.7 KC-46 Tanker Replacement 15 $3.1 15 $3.0 F/A-18 Super Hornet 24 $1.8 24 $2.0 AH-64E Apache Attack Helicopter 80 $1.4 60 $1.3 P-8A Poseidon 10 $1.7 10 $2.2 CH-53K King Stallion 4 $1.1 8 $1.6 Shipbuilding Virginia Class Submarine 2 $5.5 2 $7.4 DDG-51 Arleigh Burke Class Destroyer 2 $4.0 3 $6.0 Littoral Combat Ship 3 $1.7 1 $1.3 CVN-78 Class Aircraft Carrier 1 $4.6

• $1.8

Fleet Replenishment Oiler 1 $0.5 2 $1.1 Towing, Salvage, and Rescue Ship 1 $0.1 1 $0.1 Expeditionary Sea Base

• 1

$0.7

Source: U.S. Department of Defense. FY 2019 Budget Materials and FY 2018 Appropriations Summaries. Note that the House Appropriations National Defense Authorization Act contains language authorizing a fleet of 12 operational carriers and a two-carrier procurement.

Good News – For Two Years

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▪ The passage of the Bipartisan Budget Agreement of 2018 reduces the uncertainty of defense appropriations through FY 2019 ▪ The authorizing committees support a two-carrier buy and

• ther increases in ship building

▪ Increasing geopolitical tension will likely continue pressure to increase DoD spending in the medium-term ▪ An opportunity exists to consolidate DoD activities in Hampton Roads

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• $805
• $981
• $1,104
• $1,261
• $1,436 -$1,455 -$1,444
• $1,570 -$1,641
• $1,797
• $2,029
• $2,500
• $2,000
• $1,500
• $1,000
• $500

$0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Billions of Dollars

Congressional Budget Office: Projected Federal Deficit FY 2018 - FY 2028

CBO Baseline CBO Alternative Fiscal Scenario

Source: Congressional Budget Office (2018), Budget and Economic Output: 2018 to 2018 and Old Dominion University Economic Forecasting Project. Federal deficits in nominal dollars. The Alternative Fiscal Scenario assumes that many the provisions of the Tax Cuts and Jobs Act of 2017 would be made permanent and many of the Affordable Care Act taxes are repealed, among others.

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$263 $316 $390 $487 $576 $655 $721 $764 $805 $857 $918 $992

200 400 600 800 1000 1200 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Billions of Dollars

Projected Net Interest United States, FY 2017 – FY 2028

CBO Baseline Alternative Fiscal Scenario

Source: Congressional Budget Office (2018), Budget and Economic Output: 2018 to 2028 and Old Dominion University Economic Forecasting Project. Interest expenditures in nominal dollars. The Alternative Fiscal Scenario assumes that many the provisions of the Tax Cuts and Jobs Act of 2017 would be made permanent and many of the Affordable Care Act taxes are repealed, among others.

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2017 Forecast 2017 Actual 2018 Forecast (Jan) 2018 Forecast (May) U.S. Real Gross Domestic Product 2.2% 2.3% 3.0% 3.1% Civilian Job Growth 1.5% 1.2% 1.1% 1.2% Unemployment Rate 4.7% 4.1% 3.8% 3.6% Consumer Price Index 2.8% 2.2% 2.9% 3.0% Core Consumer Price Index 2.4% 1.7% 2.2% 2.3% 3-month Treasury Bill 1.3% 1.4% 2.0% 2.1% 10-year Treasury Bill 3.2% 2.4% 3.2% 3.3% 30-year Treasury Bill

• 2.8%

3.6% 3.6% 30-year Conventional Mortgage 4.3% 4.0% 5.0% 5.0% Federal Deficit

• $666 Billion
• $850 Billion
• $825 Billion

Virginia Real GDP* 1.5% 2.0% 2.5% 2.7% Virginia Employment Growth

• 1.4%

1.3% 1.5%

Source: 2017 data reflects the annual rate of growth, last month, or day business day of 2017 where appropriate. Data are rounded to nearest tenth. *The initial forecast for real GDP for Virginia has increased from 2.2% to 2.7% due to increases in federal spending in FY 2018 and 2019 and revisions to quarterly growth in VA during 2017.

2018 Hampton Roads Economic Forecast Stagnant Growth, Improving Future? Professor Vinod Agarwal January 31, 2018 2018 Hampton Roads Economic Forecast Stagnant Growth, 2018 Midyear Hampton Roads Economic Forecast Accelerating Growth, Challenges Remain

1.62% 2.17% 1.49% 2.27% 2.12%

• 0.04%
• 1.09%

0.90%

• 2%
• 1%

0% 1% 2% 3% 2001 to 2009 2009 to 2015 2015 to 2016 2016 to 2017e

Annual Growth Rate in Real GDP Hampton 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. Hampton Roads GDP for 2017 is our estimate.

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29

7.23% 5.24%

• 0.15%
• 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 97 101 105 109 113 117 121 125

Recovery from the Great Recession Measured in Total Jobs Restored, 2008-2018*

United States Virginia Hampton Roads

Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Peak Pre-Recession Dates are January 2008 (United States) and April 2008 (Virginia). *Data for USA through April 2018, Virginia and Hampton Roads through March 2018. US data preliminary for March and April 2018. Virginia data and Hampton Roads data are preliminary for March 2018.

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

10.00 19.83 19.34 19.96

0.0 5.0 10.0 15.0 20.0 25.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions of Dollars

Estimated Direct DoD Spending Hampton Roads, 2000 to 2017

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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

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 (Thousands)

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• 1.2

29.5 50.0 70.2 100.0 146.3 174.4 198.5 297.0

• 50

50 100 150 200 250 300 350 Hampton Roads Durham-Chapel Hill Richmond Jacksonville, FL Raleigh Northern Virginia Charlotte Virginia North Carolina

Net New Civilian Jobs Gained or Lost Selected Metropolitan Areas, Virginia, and North Carolina Peak Pre-Recession Employment to March 2018 (thousands)

Source: U.S. Department of Labor CES seasonally adjusted data and the Old Dominion University Economic Forecasting Project. Peak pre-recessionary employment occurred in 2008 for all regions except Florida, Hampton Roads, and Richmond which peaked in 2007. Comparison of total nonfarm employment in March 2018 to pre-recessionary peak employment. Data for March 2018 are preliminary.

More Jobs (Slowly)

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775.5 737.1 771.8 772.6 769.4 779.9 690 700 710 720 730 740 750 760 770 780 790 2000 2002 2004 2006 2008 2010 2012 2014 2016P 2017P

Average Annual Civilian Jobs: Hampton Roads, 2000 – 2017

Source: U.S. Department of Labor CES data and the Old Dominion University Economic Forecasting Project. Total nonfarm employment, not seasonally adjusted. Data revised on March 12, 2018.

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792.4 796.6 796.4 797.4802.7 813.4 640 660 680 700 720 740 760 780 800 820 840 2000 2002 2004 2006 2008 2010 2012 2014 2016P 2017P Thousands of Individuals

Average Annual Employment : Hampton Roads, 2000 to 2017

Source: U.S. Department of Labor LAUS data and the Old Dominion University Economic Forecasting Project. Annual averages. Not seasonally adjusted. Data revised on April 20, 2018

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827.0 844.6 833.7 836.4 837.6 848.7 660 680 700 720 740 760 780 800 820 840 860 2000 2002 2004 2006 2008 2010 2012 2014 2016P 2017P Thousands of Individuals

Average Annual Civilian Labor Force Hampton Roads, 2000 to 2017

Source: U.S. Department of Labor LAUS data and the Old Dominion University Economic Forecasting Project. Annual averages. Not seasonally adjusted. Data revised on April 20, 2018

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2.9% 3.4% 4.6% 3.9% 3.60%

0% 2% 4% 6% 8% 10% 12% Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18

Headline Unemployment Rate (U3) United States, Virginia and, Hampton Roads, 2007 – 2018

Virginia United States Hampton Roads

Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Seasonally adjusted unemployment rates. Virginia and Hampton Roads data through March 2018 while US data through April 2018. Next update: US: June 1, 2018 and Virginia: May 18, 2018

Residential Housing is Looking Up

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4,751 6,618 3,435 6,811 4,716

2,000 3,000 4,000 5,000 6,000 7,000 8,000 2006 2008 2010 2012 2014 2016 2018

Existing Residential Home Sales Hampton Roads, 2006 Q1 to 2018 Q1

Existing Residence 4-Quarter Moving Average

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 sales activity in our region.

40

$199,900 $168,500 $215,000

$150,000 $160,000 $170,000 $180,000 $190,000 $200,000 $210,000 $220,000 $230,000 $240,000 2006 2008 2010 2012 2014 2016 2018

Median Sale Price for Existing Homes Hampton Roads, 2006 Q1 to 2018 Q1

Existing Residence 4-Quarter Moving Average

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 sales activity in our region.

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918 1,191 504 846 687

200 400 600 800 1,000 1,200 1,400 2006 2008 2010 2012 2014 2016 2018

New Construction Residential Home Sales Hampton Roads, 2006 Q1 to 2018 Q1

New Construction 4 Quarter Moving Average

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.

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 Existing Homes Sales: Hampton Roads, 2006-2017

Short Sales REO Sales

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Source: 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 Sale Price of Existing Residential Homes for Selected Cities in Hampton Roads: 2007 and 2017

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Source: 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

City Median Price 2007 Median Price 2017 % change

Hampton $180,000 $155,000

• 13.9%

Newport News $199,250 $170,000

• 14.7%

Williamsburg* $284,450 $283,000

• 0.5%

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 Roads $223,000 $219,000

• 1.8%

The Hotel Industry Continues to Grow

$520.2 $708.3 $645.3 $803.1 $841.6

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Millions of Dollars

Hotel Revenue in Hampton Roads 2000-2017 4.8%

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

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Percent Change in Hotel Revenue within Hampton Roads: 2016 to 2017 0.16% 4.15% 14.43% 3.85% 5.81% 4.80%

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

Williamsburg Mkt Virginia Beach Norfolk/Portsmouth Newport News/Hampton Chesapeake/Suffolk Hampton Roads

Source: STR Trend Reports January 24, 2017, January 17, 2018, and the Old Dominion University Economic Forecasting Project.

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4.9% 3.9% 4.8% 3.0% 2.9% 4.9%

0% 2% 4% 6% 8% 10% 12% 14% USA Virginia Hampton Roads

REVENUE REVPAR Percent Change in Hotel Revenue and REVPAR 2016 to 2017

Source: STR Trend Reports January 24, 2017, January 17, 2018, and the Old Dominion University Economic Forecasting Project.

Source: Airdna (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 Millions of Dollars

Monthly Airbnb Revenue in Hampton Roads 2015-2017 (Millions of $)

2015 2016 2017

Monthly Revenue of All Airbnb Properties: Williamsburg Market, 2015-2017 (Millions of $)

Source: Airdna data received in January 2018 excluding shared rooms

$0.05 $0.08 $0.43 $0.26 $0.87 $0.52

$- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00

2015 2016 2017

The Port of Virginia: Strong Growth and Prospects for 2018

17.83 18.84 21.97

5 10 15 20 25

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Millions of Tons

General Cargo Tonnage Port of Virginia, 2000-2017

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

5.3%

1,348 2,128 1,745 2,224 2,841

500 1,000 1,500 2,000 2,500 3,000 2000 2002 2004 2006 2008 2010 2012 2014 2016 Thousands of TEUs

Twenty Foot Equivalent Container Units (TEUs) Port of Virginia, 2000-2017 7.0%

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

53

1,158 1,201 1,307 1,341 1,410 1,514 1,798

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2011 2012 2013 2014 2015 2016 2017 Number of TEUs

Average TEUs per Container Vessel Call Port of Virginia, 2011-2017

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

Performance of the Hampton Roads Economy: Year to Date March 2017 and Year to Date March 2018

54

YTD March 2017 YTD March 2018 Percentage Change Civilian Labor Force 840,978 841,657 +0.08% Employment 802,545 810,019 +0.93% Unemployment 38,433 31,638

• 17.68%

Unemployment Rate 4.57% 3.76%

• Civilian Nonfarm Payrolls

767,167 768,033 +0.11% Taxable Sales $5.09 Billion $5.28 Billion +3.74%

Source: Multiple sources available upon request.

Performance of the Hampton Roads Economy: Year to Date March 2017 and Year to Date March 2018

55

Source: Multiple sources available upon request. **Data are for YTD April 2017 and YTD April 2018.

YTD March 2017 YTD March 2018 Percentage Change Hotel Revenue $131.32 Million $141.22 Million +7.54% General Cargo Tonnage** 7.35 Million 7.39 Million +0.55% TEU Containers** 906,236 910,772 +0.50% Number of 1 Unit Housing Permits 1,209 1,100

• 9.02%

Value of 1 Unit Housing Permits $270.74 Million $245.11 Million

• 9.47%

Number of Existing Homes Sold** 6,424 6,865 +6.86% Distressed Sales as Percentage of Existing Homes Sold** 15.47% 12.34%

• Median Price of Existing Homes Sold**

$206,000 $216,900 +5.29%

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2017 Forecast 2017 Actual 2018 Forecast Hampton Roads Real Gross Domestic Product Initial Forecast 1.4%

• 1.2%

Hampton Roads Real Gross Domestic Product Mid-year revision 0.9%

• 2.2%

Civilian Job Growth 0.5% 0.9% 0.5% Unemployment Rate 4.3% 4.2% 3.8% Taxable Sales 2.6% 2.8% 3.0% Hotel Revenue 4.4% 4.8% 3.9% General Cargo Tonnage 2.7% 5.3% 2.7% One Unit Housing Permit Value 2.6% 8.6% 2.4%

Source: 2017 data reflects the annual rate of growth. Dragas Center forecast current as of April 2018.

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