Last month's announcement by Amazon that its second headquarters would be split between New York City and Northern Virginia, along with a major operations center in Nashville TN, has been incorporated into the December state baseline forecasts. The new facilities, projected to create 25,000 or more high-wage jobs in Long Island City NY and Crystal City VA plus 5,000 positions in Nashville, will have a significant impact on the economy of each.
To account for the impact of the firm's so-called HQ2, a time path for employment growth was extrapolated from the firm's announcement. In addition, adjustments were made to relevant industry output forecasts and high-level series such as the unemployment rate and effective wage rate, where relevant.
Upward adjustments capture both the direct effect of Amazon jobs and corresponding spillover effects. Industry employment and output were shifted higher for numerous sectors, including information, professional services, retail, and transportation/logistics. This was done to ensure that different aspects of Amazon's business are captured and to account for uncertainty stemming from state-by-state discretion in determining how HQ2 will be classified. Ultimately, because Amazon's new headquarters will likely entail multiple establishments, assigning more than one industry function is the most appropriate approach.
Construction payrolls and output have also been adjusted upward well into next decade to reflect the building of new facilities.
Adjacent areas such as Maryland and Washington DC underwent minor upward revisions to top-line series. The New Jersey forecast received minimal adjustments because most commuters to Long Island City will likely be from in-state.
Custom and standard alternative scenarios will also reflect these adjustments, beginning this month. Additionally, the changes will flow into metro area forecasts, with the New York City and Washington DC metro divisions as well as the Nashville metro area undergoing sizable upward adjustments.
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