The Washington DC Metropolitan Area Continues to Show Lackluster Economic Growth

The US Bureau of Economic Analysis released data on 2016 Gross Domestic Product by Metropolitan Area. In 2016, the Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area (Hence forth, the Washington Metro Area) had a $449.3 billion economy. This represents an increase of 1.1 percent over the revised 2015 figure of $444.4 billion.[1] Between 2015 and 2016, the Washington Metro Area GDP grew slower than the national rate of 1.5 percent but faster than the Commonwealth of Virginia which grew 0.6 percent.

This is the third consecutive year of regional economic growth. The GDP increase was led by growth in the Professional and Business Services sector – contributing 0.55 percentage points of the 1.1 percent increase in Washington Metro Area GDP. The finance, insurance, real estate, rental, and leasing sector had declining contributions to area GDP – reducing growth in area GDP by 0.15 percentage points.

Figure 2 shows that among the ten Metro Areas in Virginia, the Washington Metro Area is one of two that showed growth in GDP between 2015 and 2016. Richmond experienced the largest GDP growth at 2.6 percent, and was the only Virginia metro area to have consistently positive economic growth over the past five years. The metros along the I-81 Corridor, Staunton-Waynesboro, Blacksburg-Christiansburg-Radford, and Harrisonburg, saw the largest declines in GDP at -2.1 percent, -2.1 percent, and -2.2 percent respectively between 2015 and 2016. All three metros had positive economic growth of nearly 3 percent between 2014 and 2015.

[1] The 2015 Washington Metro Area GDP was upwardly revised from 442.4 billion, moving from 1.3 percent growth between 2014-2015 to 2.4 percent growth over the same period in the revised estimate.

The housing market in the Washington metro area continues to tighten as median sales price is highest March level of the decade, sales and pending sales are at decade highs, and inventory levels decline for the eleventh month in a row

• March 2017’s median sales price of $420,00 was up 5.3% or $21,000 compared to last year. This is the highest March median sales price of the last decade, easily topping the prior high of $400,000 seen in 2015.
• Sales volume across the DC Metro area was nearly $2.3 billion, up 26.7% from last March.
• Closed sales of 4,450 were up 18.5% compared to last year. It was also the highest March level in a decade and easily exceeding the 3,755 sales recorded last March.
• New contract activity of 6,254 also reached a ten-year March high, increasing by 1.4% over last year.  New listings of 8,210 were down 1.7% compared to last year.
• Active listings of 8,648 are down 11.5% compared to last year but up 15.3% compared to last month. This is the eleventh consecutive month of declines in year-over-year inventory levels, and inventories are at the lowest March level since 2014.
• The average percent of original list price received at sale in March was 97.9%, up from last year’s 97.1%, and also up from last month’s 97.4%.
• The median days-on-market for March 2017 was 15 days, 12 days lower than last year.

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This analysis of the Washington, D.C. Metro Area housing market was prepared by Elliot Eisenberg, Ph.D. of MarketStats by ShowingTime and is based on March 2017 MRIS housing data.

National employment situation numbers released this morning show payroll employment increasing by only 98,000 and the unemployment rate decreasing 0.2 percentage points to 4.5 percent. The professional and business services sector saw the largest growth at an additional 56,000 jobs and for the second straight month, retail trade lost nearly 30,000. Total employment is up 2.18 million from March 2016. 

The relatively small jobs growth could be due to large February jobs numbers, boosted by unseasonably good weather across the country, as well as the late snow storm in the upper midwest and northeast in March that possibly suppressed some seasonal hiring. Other measures of the economy remain strong, so a slowdown of one month is no cause for concern.

The unemployment rate is now at its lowest point since May 2007 as the economy gets closer to full employment. The better news lies in the U-6 unemployment rate decreasing 0.3 percentage points to 8.9 percent (includes marginally attached workers and those employed part-time for economic reasons). As the gap shrinks between the unemployment rate (U-3) and the U-6 rate we see the number of underemployed and discouraged workers decrease.