market update
Probably the largest impacts of federal hiring were noticed in the 1930s and 1940s with the Roosevelt Administration’s programs to fight the depression, followed by the buildup for World War II. Significant growth in the region’s economy and population during the last several decades can be traced to domestic events, such as the Great Society programs of the 1960s, as well as international events, such as military actions in Korea and Vietnam.
year. That has been a huge factor in cushioning the region’s economy from the national recession and aiding early recovery.
The growth in federal employment reached a plateau in the late 1970s, and in 1980 there were 370,000 federal workers in the region. As of June, 2010 there were 384,000 federal workers. So in the past 30 years, there has been a net growth of 14,000 federal workers; however, the economic value of the federal presence in the region’s economy has grown much more than that.
Since early in 2008, with the Bush administration’s programs to address the recession and resulting financial troubles, and continuing to the present, the federal workforce has begun to grow once again. From November 2007 – when the national recession officially began – to June 2010, the region’s federal workforce has grown by 40,000 employees. These are relatively high-paying jobs, and many of these new workers have moved and are moving into the region from elsewhere. This has been a major factor in the region’s economic recovery, which favorably impacts the housing market.
The Outlook
The Role of Federal Procurement In the early 1980s, the Reagan administration instituted major increases in national defense spending. Some of this work was contracted out to private companies. This practice of procuring work on federal programs has continued to increase for the past three decades. In 1984, total federal spending in the region (which includes wages to federal workers, procurement, grants to state and local governments and transfer payments) was just over $20 billion, and procurement was 38 percent of the total. By 2009, total federal spending had increased to almost $150 billion, with procurement more than double the amount spent on federal government wages and salaries. For the past decade, it has been federal procurement that has helped the region’s economy to perform better than most metropolitan areas. Procurement expenditures in the region primarily purchase services such as technology and consulting. These are high-paying jobs and have large multiplier effects in the economy. From 2000 to 2009, annual average growth in federal purchases from area companies has been 11.9 percent per NVAr reAltOr® UPDATE
Recovery from the recession is occurring, and while the region is not back to normal, it is headed in that direction:
» The Leading Economic Index for the region has been positive for eight consecutive months,
» There are now three consecutive months of job growth, » The unemployment rate is the lowest of any major metro area in the country,
» Regional housing prices have been increasing since late 2009 on an annual basis.
Nationally there will be some bumps and small steps backwards as the economy begins to gain traction, and it may be another year before the national economy and housing markets are back to what could be called normal. The local economy will fare better than the national economy in the recovery, in particular because the federal presence continues to be a growth sector. And as the national economy regains its footing during the next year, the other sectors of the region’s economy will begin to grow as well. ❈
September /OctOber 2010
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