11

Montgomery County, Maryland

ECONOMIC INDICATORS Montgomery County Council

Department of Finance

April 18, 2017

Regional and State

Economic Indicators

3

Real gross regional product increased 1.27 percent in CY2015 according

to the Bureau of Economic Analysis, the latest date available.The Center for Regional Analysis (CRA) estimates growth in real GRP in the Washington area to

increase 2.90 percent in CY2016, increase 3.10 percent in CY2017, and increase 2.70 percent in

CY2018.

1.59%

2.11%

0.02%

3.29%

1.56%

0.25%

-0.55%

0.96%1.27%

2.90%3.10%

2.70%

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%20

07

2008

2009

2010

2011

2012

2013

2014

2015

2016

est

.

2017

est

.

2018

est

.

Pe

rce

nt

Ch

an

ge

Caledar Year

Percent Change in Real Gross Regional Product

(Washington MSA)

SOURCES: Bureau of Economic Analysis, U.S. Department of CommerceCenter for Regional Analysis (CRA), George Mason University (hatched columns)

4

Payroll employment in the Washington area was over 3.2 million in

CY2016.Employment increased by 55,600 (↑1.8%) from CY2015 to reach over 3.2 million an all time high in

CY2016.

3,011.7 3,025.12,974.7 2,986.1

3,029.53,069.4

3,097.5 3,116.1

3,173.8

3,229.4

2,800.0

2,850.0

2,900.0

2,950.0

3,000.0

3,050.0

3,100.0

3,150.0

3,200.0

3,250.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

No

nfa

rm P

ayro

ll E

mp

loym

en

t(t

ho

us

ands)

Calendar Year

Washington Metropolitan Area Nonfarm Payroll Employment (thousands)

SOURCE: Bureau of Labor Statistics, U.S. Department of Labor

Real gross state product increased 1.47 percent in CY2015 according to

the Bureau of Economic Analysis, the latest date available.Moody’s Analytics estimates growth in real GSP in Maryland to increase 1.49 percent in CY2016,

increase 2.37 percent in CY2017, and increase 2.98 percent in CY2018.

5

1.35%

0.90%

-0.24%

2.64%

1.50%

0.38%

-0.11%

1.65%1.47% 1.49%

2.37%

2.98%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

est

.

2017

est

.

2018

est

.

Per

cent

Cha

nge

Calendar Year

Percent Change in Real Gross State Product

(Maryland)

SOURCES: Bureau of Economic Analysis, U.S. Department of Commerce

Moody's Analytics (hatched columns)

Payroll employment in Maryland stood at over 2.7 million in CY2016.Employment increased by 33,800 (↑1.3%) from CY2015 to reach over 2.7 million an all time high in

CY2016.

6

2,615.3 2,607.2

2,531.7 2,527.32,554.0

2,584.92,609.9

2,632.42,674.0

2,707.8

2,400.0

2,450.0

2,500.0

2,550.0

2,600.0

2,650.0

2,700.0

2,750.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

No

nfa

rm P

ayro

llEm

plo

yme

nt

(th

ou

san

ds)

Calendar Year

Maryland Nonfarm Payroll Employment (thousands)

SOURCE: Bureau of Labor Statistics, U.S. Department of Labor

Real gross regional product for the Maryland suburban division of the

Washington MSA increased 2.00 percent in CY2015 according to the

Center for Regional Analysis (CRA).According to CRA, growth in real GRP in the division (Montgomery, Prince George’s, Charles, Calvert,

and Frederick counties) is expected to increase 2.80 percent in 2016, increase 3.00 percent in

CY2017 and increase 2.60 percent in CY2018.

7

3.60%

1.40%

-1.20%

3.30%

1.10%

-0.60% -0.50%

0.70%

2.00%

2.80% 3.00%2.60%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

est

.

2017

est

.

2018

est

.

Perc

ent C

ha

ng

e

Calendar Year

Percent Change in Real Gross Regional Product (Suburban Maryland)

SOURCE: Center for Regional Analysis (CRA), George Mason University

8

Payroll employment in the Silver Spring-Rockville-Frederick metropolitan

division was 593,900 in CY2016.Employment increased 5,300 (↑0.9%) from CY2015 to CY2016 to reach all time high in CY2016.

578.2 576.1

562.8 562.0567.0

571.1576.0

581.9588.6

593.9

540.0

550.0

560.0

570.0

580.0

590.0

600.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Non

farm

Payro

llEm

ploy

men

t (t

hous

ands

)

Calendar Year

Silver Spring - Frederick - Rockville Payroll Employment (thousands)

SOURCE: Bureau of Labor Statistics, U.S. Department of Labor

9

The percent change in the consumer price index (CPI) increased from

0.33 percent in CY2015 to 1.18 percent in CY2016 – the third lowest

increase in ten yearsFor the eight years (CY2009 to CY2016), the average increase in the CPI was 1.51 percent but well

below the two-year average of 4.07 percent between CY2007 and CY2008.

3.62%

4.52%

0.23%

1.72%

3.34%

2.20%

1.52% 1.54%

0.33%1.18%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Annual Percent Change in the Consumer Price Index - All Items (Washington - Baltimore - CMSA)

SOURCE: Bureau of Labor Statistics, U.S. Department of Labor

10

As measured by the S&P/Case-Shiller Home Price Index®,

home prices in the Washington metropolitan area increased

1.9 percent in CY2016.However, the index remained 13.5 percent below its peak in CY2006.

231.75

195.25174.23 182.44 181.71 185.62

198.40207.63 209.93 213.83

0.00

50.00

100.00

150.00

200.00

250.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Ind

ex

Calendar Year

S&P/Case-Shiller® Home Price Index Washington MSA

NOTE: S&P/Case-Shiller price index is a registered trademark of Standard and Poor's

Montgomery County

Economic Indicators

12

ECONOMIC INDICATOR

DASHBOARD

LATEST DATA

REVENUE

AFFECTED

EXPLANATION COMPARISON DIRECTION

INFLATION 1.18%

2016

Property Taxes Key determinant of property tax revenues at the Charter Limit

2015: 0.33%

2014: 1.54%

UNEMPLOYMENT

RATE

3.4%

2016

Income Taxes Indicates overall health of the job market

2015: 4.0%

2014: 4.4%

RESIDENT

EMPLOYMENT

533,101

2016

Income Taxes Primary determinant of income tax receipts

2015: 527,510

2014: 520,811

PAYROLL

EMPLOYMENT

(Estimated)

490,100

2016

Income Taxes Another determinant of income tax receipts

2015: 485,100

2014: 478,200

STOCK MARKET -

S&P 500

2,238.83

December 31st: 2016

Income Taxes Key determinant of capital gains portion of the income tax

December 31st:

2015: 2,043.94

2014: 2,058.90

HOME SALES 12,896

2016

Transfer/

Recordation Taxes

Indicates activity affecting receipts

2015: 12,191

2014: 10.976

HOME PRICES

(Median Price Sold)

$409,700

2016

Transfer/

Recordation Taxes

Taxes are based on values, affects amount of taxes collected

2015: $400,000

2014: $400.000

FEDERAL FUNDS RATE 0.66%

Feb. 2017

Investment

Income

County’s return on

investments closely correlated with the Fed Fund rates

Feb. 2016: 0.38%

Feb. 2015: 0.11%

13

Resident employment in Montgomery County stood at 533,101 in CY2016.Resident employment (household survey) increased 1.1 percent (↑5,591) from 527,510 in CY2015 to

an all time high of 533,101 in CY2016.

496,401499,705

494,565

502,710508,549

512,679515,888

520,811

527,510533,101

470,000

480,000

490,000

500,000

510,000

520,000

530,000

540,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Re

sid

ent

Em

plo

ymen

t

Calendar Year

Resident Employment (Montgomery County)

SOURCE: Bureau of Labor Statistics, U.S. Department of LaborMontgomery County Department of Finance

14

The unemployment rate continued to decline in CY2016 from its peak of

5.6 percent in CY2010.The unemployment rate declined from 4.0 percent in CY2015 to 3.4 percent in CY2016 but remained

above the low unemployment rates experienced in CY2007 and CY2008.

2.6%3.2%

5.3% 5.6% 5.3% 5.2% 5.0%4.4%

4.0%3.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Une

mpl

oym

ent

Rate

Calendar Year

Unemployment Rate Montgomery County

SOURCES: Bureau of Labor Statistics, U.S. Department of LaborMontgomery County Department of Finance

1515

Home sales increased 5.8 percent in CY2016 to nearly 12,900 units. Sales in CY2016 exceeded the previous nine-year average of 10,440 units but remained below the

number of sales during the housing boom prior to CY2007.

10,355

8,519

10,376 10,4019,500

10,15511,461 10,976

12,19112,896

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Sale

s

Year

Sales of Existing Homes (Montgomery County)

SOURCE: Metropolitan Regional Information System, Inc.

1616

Median home sales prices grew to nearly $410,000 in CY2016, the first

increase since CY2013.With the sales of existing homes in the County increasing 5.8 percent in CY2016, the median sales

price increased 2.4 percent.

$444,000

$395,000

$340,000 $350,000 $350,000$368,000

$400,000 $400,000 $400,000 $409,700

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Me

dia

n S

ale

s P

ric

e

Year

Median Sales Price for an Existing Home (Montgomery County)

SOURCE: Metropolitan Regional Information System, Inc.

17

Construction of new residential properties (units) was down almost 28.1

percent in CY2016 following strong construction between CY2013 and

CY2015.Construction of single-family homes was up 17.8 percent but the construction of new multi-family units

decreased 41.8 percent.

3,933

2,134

9662,036

2,823 2,608

5,246 4,997 4,910

3,532

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

0

1,000

2,000

3,000

4,000

5,000

6,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Va

lue

($th

ou

sa

nd

s)

Un

its

Calendar Year

Number of New Residential Starts (Units) and Value (Montgomery County)

Res_Units Res_Value

SOURCES: McGraw -Hill Construction and Montgomery County Department of Finance

18

Single-family construction (units) increased in CY2016 and was the third

highest level during the past ten years.Between CY2007 and CY2011, the construction of new single-family homes averaged 845 units per

year – a result of the bust in the housing boom during prior years. Between CY2012 and CY2016,

annual construction of single-family homes averaged 1,333 units per year attributed to dramatic growth

in CY2013.

1,054 967775

645782

1,088

1,6461,459

1,1341,336

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Sta

rts

(Un

its)

Calendar Year

Number of Single-Family Residential Starts (Units) Montgomery County

SOURCE: McGraw -Hill Construction

19

Construction of multi-family units decreased 41.8 percent to nearly 2,200

units in FY2016.With the housing crash, construction declined significantly in CY2008 and CY2009. Since then,

construction experienced two distinct cycles, an average of 1,650 units between CY2010 and CY2012,

and an average of nearly 3,700 units between CY2013 and CY2015, before declining in CY2016.

2,879

1,167

191

1,391

2,0411,520

3,600 3,5383,776

2,196

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Sta

rts

(Un

its)

Calendar Year

Number of New Multi-Family Residential Starts (Units) Montgomery County

SOURCE: McGraw -Hill Construction

202020

Income Tax VolatilityYear-over-year percent changes in the income tax are volatile and sensitive to economic events

especially capital gains in Montgomery County.

0.1%

2.0%

19.5%

9.7%

5.5%6.7%

10.6%

12.8% 12.7%

8.8%

10.9%

-8.3%

-3.3%

4.3%

24.0%

8.9%7.4%

8.8%

-11.9%

-4.9%

7.2%6.2%

10.0%

-3.8%

6.6%

2.9%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Pct.

Ch

g.

Tax Year

Annual Percent Change in lncome Tax Revenues from Withholdings, Estimated Payments, October 15 Filings, and Revenue Adjustments

Stock Market Collapse and "Great Recession"

Rate increase from 2.95% to 3.2%

Beginning of Three-year Stock Market Decline and Recession

First Gulf War and Recession

Fiscal Cliff

21

Real Property ReassessmentsAfter four consecutive years of declines from levy year 2009 to levy year 2012, the

reassessment rate for real property increased over the past five years. However the rate of 7.8

percent for levy year 2017 (FY2018 – Group 2) is largely attributed to the 17.8 percent increase

for “commercial” property, while residential property increased 4.8 percent.

6.4% 13.5%

21.8%

36.3%

51.8%

65.0% 63.3%

43.4%

16.2%

-10.6%

-17.0%-14.5%

-8.6%

4.1%

11.0% 18.7% 11.1%

7.8%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

Ave

rag

e R

ate

Rea

sses

smen

t R

ate

Levy Year

Real Property Reassessments by Levy Year

(Three-Year Phase-In)

Montgomery County

Triennial Reassessment Average

Historical Average: 17.4%

SOURCE: State Department of Assessments and Taxation

22

SUMMARY

• The County’s unemployment rate in February was 3.4 percent and down from the 3.6 percent in February last year.

• Both the sales of existing homes (↑5.8%) and median prices (↑2.4%) increased in CY2016. The growth in housing market suggests that it continues to rebound from the effects of the housing bust. The housing market is expected to continue its growth albeit at a lower rate and both average sales price and median price are expected to increase during FY2017 and FY2018.

• Inflation for the Washington-Baltimore region was 1.18 percent in CY2016 – 0.85 point above the increase in CY2015. The low rates of inflation continue to effect increases in real property tax revenues due to the charter limit.