11

Montgomery County, Maryland

ECONOMIC INDICATORS Montgomery County Council

Department of Finance

April 12, 2016

Regional and State

Economic Indicators

3

Real gross regional product increased 0.27 percent in CY2014 according

to the Bureau of Economic Analysis.CRA estimates growth in real GRP in the Washington area to increase 2.90 percent this year and

increase 3.10 percent next year.

2.19%

-0.07%

3.19%

1.39%

0.23%

-0.01%

0.27%

1.90%

2.90%3.10%

2.70%2.30% 2.30%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2008

2009

2010

2011

2012

2013

2014

2015

est

.

2016

est

.

2017

est

.

2018

est

.

2019

est

.

2020

est

.

Pe

rcen

t C

ha

ng

e

Caledar Year

Percent Change in Real Gross Regional Product

(Washington MSA)

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

4

Payroll employment in the Washington area stood at nearly

3.2 million in CY2015.Employment increased by 59,400 (↑1.9%) from CY2014 to CY2015 to reach 3.2 million and was at an

all time high.

2,985.93,009.4 3,022.4

2,971.8 2,982.9

3,025.8

3,065.33,093.4

3,112.0

3,171.4

2,850

2,900

2,950

3,000

3,050

3,100

3,150

3,200

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Non

farm

Pay

roll

Empl

oym

ent

(tho

usan

ds)

Calendar Year

Washington Metropolitan Area Nonfarm Payroll Employment (thousands)

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

Real gross state product increased 1.16 percent in CY2014 according to

the Bureau of Economic Analysis.Moody’s Analytics estimates growth in real GSP in Maryland to increase 2.78 percent this year and

decline to 2.62 percent in CY2017.

5

0.83%

-0.24%

2.56%

1.39%

0.38%

-0.19%

1.16%

1.97%

2.78% 2.62%2.27%

1.88%

1.43%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

2008

2009

2010

2011

2012

2013

2014

2015

est

.

2016

est

.

2017

est

.

2018

est

.

2019

est

.

2020

est

.

Per

cen

t C

han

ge

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 nearly 2.7 million in CY2015.Employment increased by 38,400 (↑1.5%) from CY2014 to CY2015 to reach nearly 2.7 million and

was at an all time high.

6

2588.52607.3 2598.7

2522.3 2516.72542.1

2573.72596.9

2620.92659.3

2400.0

2450.0

2500.0

2550.0

2600.0

2650.0

2700.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

No

nfa

rm P

ay

roll

Em

plo

ym

ent

(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 0.60 percent in CY2014 according to CRA. Growth in real GRP in the division is expected to increase 2.80 percent this year and 3.00 percent in

CY2017.

7

1.40%

-1.20%

3.30%

1.25%0.71%

-0.30%

0.60%

2.00%

2.80% 3.00%2.60%

2.20% 2.20%

-1.50%

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

2008

2009

2010

2011

2012

2013

2014

2015

est

.

2016

est

.

2017

est

.

2018

est

.

2019

est

.

2020

est

.

Perc

ent

Ch

an

ge

Calendar Year

Percent Change in Real Gross Regional Product (Suburban Maryland)

SOURCE: Center for Regional Analysis, George Mason University

8

Payroll employment in the Silver Spring-Rockville-Frederick metropolitan

division was 585,900 in CY2015.Employment increased over 8,300 (↑1.4%) from CY2014 to CY2015 and reached an all time high.

575.6 575.9573.4

559.9 558.8563.4

567.0571.8

577.6

585.9

545.0

550.0

555.0

560.0

565.0

570.0

575.0

580.0

585.0

590.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Non

farm

Pay

roll

Empl

oym

ent

(tho

usan

ds)

Calendar Year

Silver Spring-Rockville-Frederick Nonfarm Payroll Employment (thousands)

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

9

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

1.54 percent in CY2014 to 0.33 percent in CY2015.For the previous five years (CY2010 to CY2014), the average increase in the CPI was 2.06 percent

but well below the three-year average of 3.92 percent between CY2006 and CY2008.

3.62% 3.62%

4.52%

0.23%

1.72%

3.34%

2.20%

1.52% 1.54%

0.33%0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Pe

rcen

t C

ha

ng

e

Calendar Year

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 for the Washington metropolitan area increased

1.2 percent in CY2015.However, the index remained 15.0 percent below its peak in CY2006.

247.19231.75

195.25174.23 182.44 181.71 185.62

198.40 207.63 210.02

0.00

50.00

100.00

150.00

200.00

250.00

300.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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 0.33%

2015

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

2014: 1.54%

2013: 1.52%

UNEMPLOYMENT

RATE

4.0%

2015

Income Taxes Indicates overall health of the job market

2014: 4.4%

2013: 5.0%

RESIDENT

EMPLOYMENT

525,625

2015

Income Taxes Primary determinant of income tax receipts

2014: 516,420

2013: 515,153

PAYROLL

EMPLOYMENT

(Estimated)

485,500

2015

Income Taxes Another determinant of income tax receipts

2014: 476,000

2013: 472,100

STOCK MARKET -

S&P 500

2,043.94

December 31st: 2015

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

December 31st:

2014: 2,058.90

2013: 1,848.36

HOME SALES 12,191

2015

Transfer/

Recordation Taxes

Indicates activity affecting receipts

2014: 10,976

2013: 11,461

HOME PRICES

(Median Price Sold)

$400,000

2015

Transfer/

Recordation Taxes

Taxes are based on values, affects amount of taxes collected

2014: $400,000

2013: $400.000

FEDERAL FUNDS RATE 0.38%

Feb. 2016

Investment

Income

County’s return on

investments closely correlated with the Fed Fund rates

Feb. 2015: 0.11%

Feb. 2014: 0.07%

13

Resident employment in Montgomery County stood at 525,625 in CY2015.Resident employment (household survey) increased 1.8 percent (↑9,200) from 516,420 in CY2014 and

was at an all time high.

495,926 496,401499,705

494,565

502,710508,528

512,589515,153 516,420

525,625

475,000

480,000

485,000

490,000

495,000

500,000

505,000

510,000

515,000

520,000

525,000

530,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Res

iden

t E

mp

loym

ent

Calendar Year

Resident Employment (Montgomery County)

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

14

The unemployment rate continued to decline in CY2015 from its peak of

5.6 percent in CY2010.The unemployment rate declined from 4.4 percent in CY2014 to 4.0 percent in CY2015 but remained

above the low unemployment rates experienced between CY2006 and CY2008.

2.9% 2.6%3.2%

5.3% 5.6%5.2% 5.2% 5.0%

4.4%4.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Un

em

plo

ym

en

t R

ate

s

Calendar Year

Unemployment Rates (Montgomery County)

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

1515

Home sales increased 11.1 percent in CY2015 to over 12,000 units. Sales in CY2015 exceeded the previous eight-year average of 10,220 units but remained below the

number of sales during the housing boom prior to CY2007.

13,495

10,3568,519

10,375 10,4089,500 10,156

11,461 10,97612,191

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

An

nu

al

Sale

s

Calendar Year

EXISTING HOME SALES (Montgomery County)

SOURCES: Metropolitan Regional Information System, Inc.Montgomery County Department of Finance

1616

Median home sales prices at $400,000 did not change in CY2015.With the sales of existing homes in the County increasing 11.1 percent in CY2015, the median sales

price remained constant and have remained constant over the past three years.

$439,000 $444,000$395,000

$340,000 $350,000 $350,000 $368,000$400,000 $400,000 $400,000

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Med

ian

Pri

ce

Calendar Year

Median Home Sales Price

Montgomery County

SOURCES: Metropolitan Regional Information System, Inc.

Montgomery County Department of Finance

17

Construction of new residential properties (units) was down almost 6.3

percent in CY2015 – but was the third highest since CY2004 (4,686 units).Construction of single-family homes was down 20.8 percent but the construction of new multi-family

units increased 1.1 percent.

3,2693,933

2,134

966

2,036

2,823 2,608

5,246 4,9974,683

$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

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Valu

e (

$th

ou

san

ds)

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) decreased in CY2015 but was the third

highest level during the past ten years.Between CY2006 and CY2011, the construction of new single-family homes averaged 850 units per

year – a result of the bust in the housing boom during prior years. Between CY2012 and CY2015,

annual construction of single-family homes averaged nearly 1,310 units per year attributed to dramatic

growth in CY2013 or 1,200 units excluding CY2013.

8671,054 967

775645

782

1,088

1,6461,397

1,106

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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 was up significantly over the past three

year at an annual average of over 3,570 units.From CY2006 to CY2007, construction of multi-family units averaged nearly 2,640 units per year.

With the housing crash, construction declined significantly in CY 2008 and CY2009. Since then,

construction rebounded by CY2013 and exceeded construction in CY2006 and CY2007.

2,4022,879

1,167

191

1,391

2,0411,520

3,600 3,538 3,577

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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%

-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

Pc

t. C

hg

.

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

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 four years. However the rate of

11.1 percent for levy year 2016 (FY2017 – Group 1) is largely attributed to the 20.9 percent

increase for “commercial” property, while residential property increased 9.6 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%

-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

Av

era

ge

Ra

te

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: 17.7%

SOURCE: State Department of Assessments and Taxation

22

SUMMARY

• The County’s unemployment rate in January was 3.6 percent and down from the 4.3 percent in January last year. However, the increase in the County’s resident employment in CY2015 could provide an offset to the impact of the Wynne decision by the U.S. Supreme on the County’s income tax revenues through the remainder of this fiscal year.

• Sales of existing homes in the County increased 11.1 percent in CY2015 but median prices did not change. The growth in housing sales suggests that the housing market has begun to rebound from the effects of the housing bust. The housing market is expected to continue its growth albeit at a lower rate and prices both average sales price and median price are expected to increase during FY2016 and FY2017.

• Inflation for the Washington-Baltimore region was 0.33 percent in CY2015 – one percentage point below the increase in CY2014. The low rate of inflation significantly reduced real property tax revenues at the charter limit below previous estimates.