Sonya Ravindranath Waddell

Vice President and Economist, Regional and Community Analysis

Research Department

National and Regional Economic Outlook

VA Senate Finance Committee

November 21, 2019

The views and opinions expressed herein are those of the

author. They do not represent an official position of the Federal

Reserve Bank of Richmond or the Federal Reserve System.

What is the Story?

On the one hand…

• Consumer spending growth is solid

• Employment is growing and labor markets are tight

• The Virginia economy continues to grow

On the other hand…

• Residential and business investment has been soft

• Slowdown in manufacturing, particularly among firms with a global

reach

– Trade policy remains uncertain

– Global economic growth is slowing

• Sentiment indices are soft

• Growth in Virginia continues to trail that of the nation and economic

activity is not uniform across the Commonwealth

2

National Economic Trends

3

U.S. Real Gross Domestic Product

Source: Bureau of Economic Analysis, Federal Reserve Board /Haver Analytics

4

-6

-4

-2

0

2

4

6

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

% Change, SAAR

Q3: 2019

US: 1.9%

Personal Consumption Expenditures

5

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

% Change, SAAR

Q3: 20192.9%

Total Employment Growth

Monthly Change

October: 128

September: 180

August: 219

Source: Bureau of Labor Statistics/Haver Analytics

6

-800

-700

-600

-500

-400

-300

-200

-100

0

100

200

300

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Average Monthly Change, Thous.

Unemployment Rate

Source: Bureau of Labor Statistics, Federal Reserve Board of Governors/Haver Analytics

0

1

2

3

4

5

6

7

8

9

10

11

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

UnemploymentRate (Percent)

October 2019

US: 3.6%

7

Non-residential Fixed Investment

8

-30

-25

-20

-15

-10

-5

0

5

10

15

20

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

% Change, SAAR

Q3: 2019

-3.0%

University of Michigan Consumer Expectations

Source: University of Michigan via Haver Analytics

40

50

60

70

80

90

100

2009 2011 2013 2015 2017 2019

Index, Q1 1966=100

Oct

9

National Federation of Independent Business

80

85

90

95

100

105

110

80

85

90

95

100

105

110

2009 2011 2013 2015 2017 2019

Index, 1986=100

Sep

Source: NFIB via Haver Analytics

10

Duke/CFO Survey

50

55

60

65

70

75

50

55

60

65

70

75

2009 2011 2013 2015 2017 2019

Index, 100 = Most Optimistic

Q3

Source: Duke/CFO via Haver Analytics

11

Regional Economic Trends

12

30

35

40

45

50

55

60

65

70

-40

-30

-20

-10

0

10

20

30

40

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

3-m

onth

avera

ge

Manufacturing Composite Index (Left Axis)

ISM Manufacturing (Right Axis)

Richmond Manufacturing Survey and ISM Manufacturing Survey

Economic Activity in the Fifth District

Manufacturing Sector

Source: The Federal Reserve Bank of Richmond/Institute of Supply Management

13

Economic Activity in the Fifth District

Service Sector

30

35

40

45

50

55

60

65

70

-40

-30

-20

-10

0

10

20

30

40

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

3-m

onth

avera

ge

Services Revenue Index (Left Axis)

ISM Nonmanufacturing (Right Axis)

Richmond Service Sector Survey and ISM Nonmanufacturing Survey

Source: The Federal Reserve Bank of Richmond/Institute of Supply Management

14

Payroll Employment

-6

-5

-4

-3

-2

-1

0

1

2

3

4

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

YoY % Chg (SA) U.S.

Virginia

September 2019

US: 1.4%

VA: 0.6%

Source: Bureau of Labor Statistics/Haver Analytics

15

16

MSA Employment Growth

Source: Bureau of Labor Statistics/Haver Analytics

3.0

2.2

1.7

1.4

1.1

1.0

0.8

0.6

0.6

0.4

-0.1

-1 0 1 2 3 4

Winchester

Harrisonburg

Charlottesville

U.S

Roanoke

Northern Virginia

Richmond

Virginia

Virginia Beach

Lynchburg

Blacksburg

YoY% Change (SA)

September 2019

17

Virginia MSA Total Employment

18

Blacksburg

Charlottesville

Harrisonburg

Lynchburg Northern Virginia

Richmond

Roanoke

StauntonVirginia Beach

Winchester

0.0

0.5

1.0

1.5

2.0

2.5

-1 0 1 2 3 4

10-year Average Annual % Change

YoY % Change

Bubble size = Total Employment - September 2019

Source: Bureau of Labor Statistics/Haver Analytics

Virginia Unemployment Rate

0

1

2

3

4

5

6

7

8

9

10

11

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

PercentU.S.

Virginia

Source: Bureau of Labor Statistics/Haver Analytics

September 2019

US: 3.5%

VA: 2.7%

19

Unemployment in Virginia Counties

Source: Bureau of Labor Statistics/Haver Analytics

20

Summary

• Recent economic data indicates continued growth

in the U.S. economy. Labor markets are tight and

consumer spending is solid.

• However, recent data on investment has been

soft, manufacturing activity seems to be slowing,

and sentiment continues to be less positive than it

was through most of 2018.

• The Virginia economy is growing, although at a

slower pace than that of the nation. Of course,

economic conditions vary among regions of the

Commonwealth.

21

The views and opinions expressed herein are those of the

author. They do not represent an official position of the Federal

Reserve Bank of Richmond or the Federal Reserve System.

Questions?

22