Featuring Dr. Terry Clower
Director, Center for Regional Analysis
George Mason University
On June 11, Dr. Terry Clower presented a Mid-Year Economic Update as a follow up to his Annual Economic Outlook, which takes place in January and has been sponsored by Matthews, Carter & Boyce for the past 12 years. With so much uncertainty and a rapidly changing economic landscape, MCB leadership and Dr. Clower felt a mid-year update would be of great interest to our clients, partners and community business leaders. MCB was pleased to once again welcome Dr. Clower to address many of the important economic issues of the day.
Dr. Clower focused a good part of his presentation on the Washington, DC area economy but opened with a broad outlook of the state of the national economy.
Across the country, Dr. Clower noted that economic growth has started to slow, with some negative growth in the first quarter: “an artifact of the tariff narrative coming out of the current administration,” he said. President Trump’s promise that he was going to impose tariffs caused businesses to buy goods earlier, and since many of these transactions were classified as international trade, that counts against GDP. This does not mean the economy has moved into recession, at least not yet, he commented.
Nationally, the Job market has remained resilient – and pretty stable overall. But there are early indicators of weakness in the labor market; there are more people out there who cannot find the full time jobs they are looking for. “We are going to see some real labor market challenges moving forward,” he said.
Consumer confidence has been on a downward slide. There was a “Trump bump” after the first time President Trump was elected, but this time there has been a bit of an opposite effect.
“We can talk ourselves into recession if consumers are pulling back feeling less confident and not making big purchases,” Dr. Clower shared.
Regarding the producer price index – there is going to be continuing pressure on prices as we have not seen the major impacts of tariffs yet; it is going to be another two to three months before we start seeing the impact of higher tariffs on prices.
“Tariffs will be inflationary; higher for longer is still the narrative about interest rates,” he shared.
Dr. Clower next moved into an overview of regional trends in the Washington, DC metro area. Here in the DMV, the job market has slowed over the past few months, and “we are seeing signs of a slowing economy here in our region.” The construction industry in particular is having trouble finding labor, and would be experiencing faster growth and expansion if that were not the case.
Dr. Clower provided some additional regional perspective: The District is flat in terms of growth; suburban Maryland is also flat (Montgomery County’s reputation for not being business friendly is starting to have an effect); in Northern Virginia we continue to see growth and the labor force is continuing to move to the NOVA suburbs. “ Things are also slowing in NOVA; though we are doing better than other parts of our region, we are not doing as well as we were.”
Also across our region, unemployment rates are creeping up; unemployment is growing faster here than the rest of country, which is not a surprise given the administration’s actions.
Dr. Clower provided these additional insights: we will be seeing much lower levels of net international migration in the next year, which will present challenges both here and across the country. “We rely on immigrants to fill critical roles in our economy,” he shared…”in construction, hospitality, and even computer technology, immigrants are an important component of our labor force.”
With respect to housing in this region, people are getting acclimated to higher interest rates but fear of the economy and the actions of the administration targeting this region is dampening housing demand. The market is softening but prices are not coming down. “You can expect your house will be on the market for more days than what we have experienced in the past, but it will still be a very tight market.”
Dr. Clower also spent some time reviewing the scale of job reductions, including the dismantling of USAID, IRS buyouts, Department of Justice layoffs, the firing of probationary workers and voluntary quits. “Every federal job has regional impact,” he shared, “two to three regional jobs are lost for every federal job.”
Positives for our region continue to be the influx of data centers contributing to growth, federal workers filling job vacancies, and the potential of unused/underused federal office inventory into the market.
“We can be more competitive, but we must alter attitudes about development and business growth,” he shared.
These are just a few highlights of Dr. Clower’s very comprehensive presentation. For a copy of Dr. Clower’s presentation from our virtual event, contact [email protected]. For more information on future events, stay in touch with MCB!
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