Cloud of sequestration looms over D.C. region, Washington Post, August 23, 2015

Jonathan O'Connell, WaPo, wrote an excellent article this weekend on the Congressional federal budget axe that hangs over our region, including Fairfax County and Reston, in the name of "sequestration"--most of which will hit Defense Department spending, a major driver of local economic growth via federal employment and contracts for our county and community. 

Here are a couple of key passages from that article:

No state is more reliant on defense spending than Virginia, where it affects nearly 13 percent of the commonwealth’s economic output, tops nationwide, and provides the basis for 11 percent of jobs, third in the nation. . .

. . . office parks in Northern Virginia have emptied while defense contractors consolidated or closed locations, and developers of some new buildings have had trouble finding companies willing to sign deals.

According to the Defense Department research, things are likely to worsen over the next four years. From 2010 to 2012, Virginia experienced $9.8 billion in defense cuts, with the vast majority of losses in Northern Virginia. Direct defense spending in the state is projected to drop from $64 billion this year to under $62 billion in 2019.

Virginia’s elected leaders are sounding the alarm, with Senators Timothy M. Kaine (D) and Mark R. Warner (D) repeatedly calling for budget legislation to replace the sequester. . . .

Further sequestration is likely in the Republican-led Congress, although these Senators and Congressmen may also be looking at the 2016 election. 

Click here to read the full article.

Jet lagged at Dulles, Loudoun Times, April 22, 2015

Wednesday, Apr. 22, 2015 by Trevor Baratko

Anyone who doubts the severity of the problems facing Dulles International Airport – the hundreds of millions in capital debt, dip in passenger totals and a consistent failure to compete with the smaller Reagan National down the road – need only consider the speakers headlining an April 16 seminar on why Dulles matters.

There, in an open conversation hall at AOL's Dulles headquarters, stood a governor, a U.S. Senator, congresswoman and a half-dozen state and local politicians. All were speaking to the airport's importance, and listening were more than 300 stakeholders and interested parties. These were busy people – busy people who made time for Dulles, because they know the airport is struggling, and they know they need solutions.

Passenger counts at Dulles have fallen over the past decade, from a peak of more than 27 million in 2005 to 23.6 million in 2010 and less than 22 million in 2014. Cargo activity too has dipped, about 25 percent in the past five years.

Two key stats further underscoring Dulles' trials note that nearly the same number of travelers used Dulles and Reagan in 2014, this despite Dulles being 14 times larger than Reagan, and the Metropolitan Washington Airports Authority, which operates Dulles and Reagan, has racked up about $240 million in annual debt service.

Why does the success and viability of Dulles matter? It's simple, economists and politicians say. The airport generates more than $1.2 billion a year in state and local tax revenue for Virginia, D.C. and Maryland, and it supports nearly 250,000 direct or indirect jobs, according to a study commissioned by MWAA. . . .

Click here for the rest of this article.  

While the downward trend in Dulles air traffic has been know for some time, it's linkage and impact on the rest of the area's County--especially the much vaunted "Dulles Corridor" including Tysons and our own Reston--is another sign of the growing economic difficulty of Fairfax County and especially the Dulles Corridor which is counting on the Silver Line to be the engine of County growth for decades to come.  That fewer people that use or work or ship at Dulles only adds to the growing laundry list of things not quite working the way developers and politicians fantasized more than a decade ago when planning for the Silver Line got serious.

We can hope that completion of the Silver Line through IAD and into Loudoun County, now scheduled for 2018, will help reverse the trend for the airport and the corridor, but it will take a long, long time. 

Surging City Center Job Growth, City Reports, February 2015

Following is the summary from the subject research report.  It shows that city centers have grown jobs at a much faster rate than surrounding suburban centers in the ongoing economic recovery; indeed, jobs on the periphery declined overall.  The findings demonstrate the critical fallacy in Fairfax County government's belief that if you allow millions of square feet of development in Tysons and Reston, it will result in high-density development, high real estate valuations, and tens of thousands of added jobs and residents.  Apparently not, but that won't stop the County leaders from closing their eyes, clapping their hands, and clicking their heels three times in an effort to make their self-delusions come true. 

For over half a century, American cities were decentralizing, with suburban areas surpassing city centers in both population and job growth. It appears that these economic and demographic tides are now changing. Over the past few years, urban populations in America’s cities have grown faster than outlying areas, and our research shows that jobs are coming with them.

Our analysis of census data shows that downtown employment centers of the nation’s largest metropolitan areas are recording faster job growth than areas located further from the city center. When we compared the aggregate economic  performance of urban cores to the surrounding metro periphery over the four years from 2007 to 2011, we found that city centers—which we define as the area within 3 miles of the center of each region’s central business district—grew jobs at a 0.5 percent annual rate. Over the same period, employment in the surrounding peripheral portion of metropolitan areas declined 0.1 percent per year. When it comes to job growth, city centers are out-performing the surrounding areas in 21 of the 41 metropolitan areas we examined. This “center-led” growth represents the reversal of a historic trend of job de-centralization that has persisted for the past half century.

As recently as 2002-2007, peripheral areas were growing much faster (1.2 percent annually) and aggregate job growth was stagnant in urban cores (0.1 percent). While the shift of metropolitan job growth toward services is aiding job centralization, the strong central growth of 2007-11 appears to be driven by the growing competitiveness of central cities relative to peripheral locations.

Our analysis shows that city centers had unusually strong job growth relative to peripheral locations in the wake of the Great Recession. Some of the impetus for central city growth comes from the relatively stronger performance of industries that tend to be more centralized, such as finance, entertainment, restaurants, and professional services.  The story is not just that job growth in central cities is improving when compared to outlying areas – city centers have also erased their competitive disadvantage relative to peripheral locations.

We undertook a shift-share analysis that allowed is to separate out the effects of changing industry mix from relative competitiveness. The data make it clear that city centers are more competitive in 2011 than they were in 2007. While city centers had a negative competitive effect in the 2002-07 period, their relative competitiveness for industry has been equal to peripheral locations from 2007-11.

The strength of city centers appears to be driven by a combination of the growing attractiveness of urban living, and the relatively stronger performance of urban-centered industries (business and professional services, software) relative to decentralized industries (construction, manufacturing) in this economic cycle. While it remains to be seen whether these same patterns continue to hold as the recovery progresses, (the latest LEHD data on city center job growth are for calendar year 2011), there are structural forces that suggest the trend of center-led growth will continue.

Click here to download the full report.