Economic Indicators Latest Updates Uncategorized

Inverted Yield Curves and an Impending Recession

Recently the financial press has had several stories talking about interest rate spreads and inverted yield curves with whispers of the word “recession”. But what exactly is an inverted yield curve and what predictive role does it play in the U.S. economy?

The yield curve is the difference in short-term rates like a three-month or 1-year Treasury note and long-term interest rates like on 10 year Treasury bonds. Short-term interest rates paid on Treasury notes are usually lower than interest paid on long-term bonds. If short-term rates are higher than long-term rates, the yield curve is upside down, or inverted. Over the past several months, the difference in the short term and long term rates have become very small, and there is concern the yield curve will invert (see chart below).

There are many factors that affect government bond rates including stock prices (an alternative investment to bonds), currency exchange rates (international investors), policy actions by the Federal Reserve Bank and other central banks in Europe, China and elsewhere, government deficits/debt levels, and other factors. For this discussion, we will focus on perceptions of risk and uncertainty about future U.S. economic performance. When investors view the outlook for the US economy as uncertain (higher levels of risk), they will expect to earn higher interest rates on government notes and bonds. From this perspective, when short-term rates are higher than long-term rates, investors are saying they are less certain about the economy next year versus ten years from now. That’s extraordinary. Imagine trying to make business decisions in the next 12 months versus 10 years from now and being less certain about next year than far into the future.

Since 1959 the yield curve has inverted 8 times. For 7 of those times the US economy went into recession within a few months. The figure below shows the spread between 10-year Treasury Bonds and 1-year Treasury Notes. The grey bands indicate recessions in the U.S. economy. Some financial experts see an inverted yield curve as almost a sure sign of an impending recession.

So, are we headed to a recession? After all, even though economic growth since the end of the Great Recession has been relatively slow, the current growth cycle is long-in-the-tooth. In historic terms, we are overdue for a recession. Fortunately, we see the very small yield spread as an artifact of other market factors. Short-term interest rates are increasing in large part because the Federal Reserve Bank is raising its rates to more market-normal levels. On the other end, the economy is doing better and more money is flowing into pension funds, foundations, and other institutional investors. These institutional investors are buying more long-term bonds, which means that interest rates paid on these financial instruments is being held down, which narrows the spread. Still, if we do experience an inverted yield curve over the next several months, expect some market players to “freak out,” at least temporarily.

Many realtor clients in Northern Virginia are highly attuned to market data such as interest rate spreads. If your clients show signs of “freaking out,” we suggest telling them to consult their financial advisors and to consider that the fundamentals of the U.S. economy are still strong. With interest rates still low and a very solid job market, this remains an excellent time to be in the housing market.

CRA Research Economic Indicators Latest Updates News

DC Region Population Estimates and Components, 2016 – 2017

The US Census Bureau released the 2017 Population County and Metro/Micro Area Population Estimates. Between 2016 and 2017, the Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area (Hence forth, the Washington Metro Area), increased its population by 65,908 between July 1, 2016 and July 1, 2017.1 This represents an increase of 1.1 percent, and continues the trend of relatively stable regional population growth; the region grew 1.0 percent between 2014 and 2015, and 1.0 percent between 2015 and 2016.

Read the full report here

Figure 1 shows that the region declined in two of the three components of population change. The region had less natural increase and less international migration between 2016 and 2017, than it did between 2015 and 2016. Perhaps most noteworthy for the region is the continued net domestic outmigration for the fourth consecutive year. Although not as large as in previous years, over 21,000 more domestic migrants left the Washington Metro Area than moved to the area.

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Event Recap: Symposium on Strengthening the Pipeline from School to Work

On March 8th, 2018 George Mason University’s Schar School of Policy and Government, the College of Education and Human Development, Mason’s Center for Regional Analysis coordinated the “Symposium on Strengthening the Pipeline from School to Work: Private Sector and School Partnerships”. At the day-long gathering located at the George Mason University Arlington Campus, over 250 educators, business leaders, and academics met to discuss rigorous strategies for establishing and growing partnerships and innovative work-based learning opportunities.

The day consisted of two morning panels which included the following school and business leaders:

  • Anne Holton, former Virginia Secretary of Education and visiting professor of education policy at GMU
  • Jeffery Smith; Superintendent, Hampton City Schools and Champion of the Academies of Hampton
  • Jason Price, Commander, Community Engagement Unit, Hampton Police Division
  • Ralph Saunders, The Academy of Law & Public Safety at Bethel High School
  • Matt Burrows, Superintendent, Appoquimimink (DE) School District
  • Tom Windley, CEO, Premier Physical Therapy
  • Jared Cotton, Superintendent, Henry County (VA) Public Schools
  • Monica Callahan, ChamberRVA, Mission Tomorrow Job Fair, FutureRVA Initiative
  • Charles Britt, NOVA SySTEMic, Northern Virginia Community College
  • Dr. Steve Constantino, Acting Virginia Superintendent of Public Instruction

Former Secretary of Education Arne Duncan gave the keynote address after lunch, affirming the need of business and school collaboration and discussing his current efforts with Chicago CRED. The day ended with an encouraging panel of students who have experienced a work-based learning project. The panel demonstrated the amazing potential of strong partnerships between businesses and schools to 1) help students develop critical skills for success in the workplace and 2) expose students to career options including possibilities they might not have otherwise encountered.


We are greatly appreciative of:

  • Financial support of the Schar School of Policy and Government, the College of Education and Human Development, and within CEHD the Center for Education Policy and Evaluation
  • Staff and logistical support from staff and students at CEHD, and here at the Schar School the Centers for Public Service and the Center for Regional Analysis.

Thank you to our sponsors:

  • Phillips programs for children and families which helps youth with behavioral health needs get the education and training they need to succeed.
  • Skillsource Group, which helps connect both displaced and incumbent workers to the education, training, and placement opportunities they need to succeed.

Special Thanks to the following partners:

Economic Indicators Latest Updates Presentations

26th Annual NOVA Chamber Economic Conference

Dr. Terry Clower spoke about the United States Economic Outlook for 2018 at the 26th Annual Northern Virginia Chamber of Commerce Economic Conference on Thursday, January 18th. The event was held at the Fairview Park Marriott in Falls Church, VA.

View the Presentation here

Economic Indicators Latest Updates News

2016 GDP Growth in the Washington DC Metropolitan Area and Commonwealth of Virginia

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.

CRA Research News

GO Virginia Region 7 Plan

The Center for Regional Analysis is proud to support the efforts of the GO Virginia Initiative. CRA has been assisting the Region 7 GO VA Council in the creation of their Growth and Diversification Plan – a  strategic plan which will establish criteria that guide the selection of projects developed by the regions will effectively move the economy forward. The completed document is available here.

Region 7 includes the counties of Arlington, Fairfax, Loudoun, and Prince William and the cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park in Northern Virginia.

Other GO Virginia Support

In addition, CRA partnered with Old Dominion University and the Natelson Dale Group in the creation of the Growth and Diversification Plan for Region 5 (Hampton Roads). That report is available here.

In early Summer 2017, CRA was contracted by the Virginia Department of Housing and Community Development (DHCD) to compile baseline data for each of the seven GO Virginia Regions. The resulting data is available here in presentation and excel formats.

About GO Virginia

The Virginia Initiative for Growth and Opportunity in Each Region (GO Virginia) was initiated by Virginia’s senior business leaders to foster private-sector growth and job creation through state incentives for regional collaboration by business, education, and government. Recognizing the harsh effect of deep federal budget cuts on a Virginia economy that is overly dependent on public-sector jobs, they launched the GO Virginia campaign to work for regional cooperation on private-sector growth, job creation, and career readiness. For more information visit: or

CRA Research Economic Indicators Latest Updates

Metro Ridership Viewer

Public transportation viability and accessibility are vital to the regional economy, especially in the Washington Region where we currently hold the second longest commute time in the nation.  The Washington Metropolitan Area Transit Authority is facing several challenges due to funding, administration, and performance issues, especially with its Metrorail system. As the system continues in a period of line closures (safe-tracking), rate hikes, and funding issues, we at CRA are keeping a close eye on Metro related data as a key economic indicator of the region. As a part of this, we have released an interactive Metrorail ridership viewer on our website which breaks down weekday ridership by station. The data currently includes ridership numbers from 2010 through 2017 Quarter 1 and will be updated quarterly into the future.

Click here to Explore the Data  

Each data point indicates the average Monday through Friday daily ridership on the week beginning with the date listed. With a decrease across all stations of nearly 16%,  80 out of 92 stations have decreased in weekday ridership from 2011 through 2016. Stations on the ends of the orange line have decreased the most including West Falls Church (-73%), Vienna (-41%), Landover (-38%), Dunn Loring (-34%), Deanwood (-34%),  and  New Carrolton (-31%). Many park and ride stations have decreased in ridership significantly as well, including Franconia-Springfield (-34%), Huntington (-23%), and Shady Grove (-19%). Among the few stations showing increased ridership, the NoMa-Galluadet Station (New York Ave) ridership increased nearly 15% along with a 6% increase at Navy Yard (6%).

Each station tells a unique story and many real-time phenomena are displayed in the ridership data. A few insights are shown below. Please share any additional unique findings or insights on our twitter page @GMU_CRA or by email to

  • Many stations cater primarily to workforce commuters. The Pentagon Station –  being a big bus to rail transfer point with many federal/nonfederal workers and contractors – displays predictable dips during holidays. Most stations show significant dropoffs during the weeks of Thanksgiving and the Holidays.
  • Cherry Blossom season is one of the most popular times for locals and tourists alike to visit DC. The Smithsonian station, among others, drastically spikes during the week of the Cherry Blossom festival and again in mid-summer. 
  • The Navy Yard station is located near Nats Park and we can visually see the effects of baseball season on ridership there. 
  • Service on Phase I of the Silver Line opened on July 26, 2014 between Wiehle – Reston East and Largo Town Center, with five new stations being added to the existing network west of East Falls Church. The effects of this opening are seen by comparing the new station of Whiele to the West falls Church station (just before the silver line meets and joins the Orange). West falls church drops dramtically in late July as Whiele comes on line. The second phase of the silver line out to Ashburn and Dulles is anticipated to open in 2018, and it will be interesting to see its effects.  

  • SafeTrack is an accelerated track work plan to address safety recommendations and rehabilitate the Metrorail system to improve safety and reliability. The program has been implementing intermittent line segment single tracking and shutdowns since early June 2016 and is expected to end in June 2017. Its effects can be visualised by matching the scheduled surges to specific stations. It will be crucial to analyze the effects of SafeTrack after its completion, specifically whether ridership returns to pre-maintenance levels.
    • Single tracking between Vienna and West Falls church causes a dip late 2016 in Vienna ridership (also accounted for in the corresponding spike at West Falls Church above). 
    • Ballston ridership sags in mid-2016 due to single tracking.
    • Brookland ridership goes to zero as a segment of the red line is shut down in November 2016. 
    • Crystal City sinks as the blue line closed between Pentagon City and National Airport in mid-July 2016
    • King Street station is down to Holiday ridership numbers in March 2017 due to single tracking.  

Please share any unique findings or insights on our twitter page @GMU_CRA or by email to