From The Frederick News-Post:
The Washington region’s economy should continue to expand through at least the first quarter of 2018, on track to record its strongest performance since 2010, according to a report from one of the area’s leading economists.
“The performance of the region’s forward-looking indicators continues to suggest stronger growth six to eight months ahead,” said the October “Washington Economy Watch” from the Stephen S. Fuller Institute for Research on the Washington Region’s Economic Future, based at George Mason University.
The institute’s index tracks current economic conditions, including wage and salary employment growth, consumer confidence, domestic passenger volume at Ronald Reagan Washington National and Washington Dulles International airports, and sales of non-durable retail goods such as food and clothing. The index was down 0.3 percent in August from July, but up 3.59 percent from August 2016, according to the report.
The August numbers mark the 41st consecutive month that the index has increased compared with the same month the previous year.
Meanwhile, the index designed to predict the region’s economy six to eight months in the future is “picking up steam,” said Jeannette Chapman, deputy director and senior research associate at the institute.
The region added 44,500 jobs between September 2016 and September 2017, the second-lowest number for any month this year.
But a 7,100-job drop in the professional and business services sector, which represents many government contractor and other white-collar jobs, could signal a shift in the region’s economy, the study said.
Northern Virginia is usually more susceptible to cuts in government contracting jobs than the District of Columbia or suburban Maryland, Chapman said.
Maryland typically has more jobs in biotech or industries other than contracting, she said.
Federal spending cuts would likely affect contracting jobs more than the kinds that Maryland has, unless funding for the Department of Health and Human Services gets reduced, Chapman said.
In that case, Maryland could feel more of an impact than Washington or northern Virginia.
But while the Fuller report generally paints a positive picture of the region’s economy, it notes that potential uncertainty over the federal budget and other issues could create complications.
“With the FY 2018 budget coming up for approval — the current budget agreement expires on Dec. 8 — and with the status of Administration proposals for tax reform and policies relating to immigration and health care uncertain, not to mention the Debt Ceiling extension coming due in January, the wildcards are many and could easily alter the trajectory of the Washington region’s economy,” the report states.
If funds shift from jobs that Washington specializes in to things like infrastructure, or if top-level positions at federal agencies are eliminated, the region would feel an impact.
Changes to fiscal policy could create a “ripple effect” through the region’s entire economy, Chapman said.
A direct cut in federal employment or in procurement spending would even affect people not employed by the federal government through people cutting down on entertainment and other kinds of discretionary spending.
Even if federal workers eventually get paid for the time they miss during a shutdown, that doesn’t help the restaurants and other businesses that lose customers during a shutdown and can never make up that income, said Dariaus Irani, chief economist at Towson University’s Regional Economic Studies Institute.
Irani said Maryland’s concentration of federal and military installations makes it vulnerable to federal budget problems.
About 5 percent of the state’s workforce are federal workers, while an additional 10 percent are contractors, he said.
Cutbacks at places like the National Institutes of Health or the National Institute of Standards and Technology could mean that fewer openings are filled as people retire, meaning fewer well-paying jobs that can help the local economy, he said.
Budget uncertainty could also be felt indirectly through things such as home sales, Chapman said.
When people feel uncertain, that uncertainty makes them hesitant to make long-term changes such as buying or selling a home.
The housing market in Frederick County has been split, with cheaper houses selling quickly but more expensive houses taking much longer, according to Wayne Six, a local appraiser with his company, Six & Associates.
The market for houses worth $350,000 or less is very good, while more expensive houses can struggle to get sold, he said.
For houses priced between $200,000 and $300,000, the average time on the market is 64 days, Six said.
For those between $600,000 and $700,000, the average time was 140 days.
“It’s kind of like going fishing, and there’s not a lot of fish biting,” Six said.