The Economics of Stephen Fuller How a wonky academic became a major player in the local real-estate business
It’s never easy to speak third in a lineup of economists. People in the audience fidget. They check their phones and eye the door. But if the third person is Stephen Fuller of George Mason University, a good number of them will stick around to hear the economic weather report. Unless, that is, they’ve already heard him say the same thing at another event that same week—always possible in the small world of Washington-area building industry types. Invariably, the spiel comes packaged with a brilliant white smile and a silver lining.
“We don’t know what the next bubble is. If we did, we’d invest in it,” Fuller jokes one December morning to a chandeliered banquet hall outside Baltimore full of Maryland homebuilders, before launching into a battery of slides showing job growth, home prices, and federal spending. The takeaway is reassuring.
“By 2013, it’s going to be a really roaring economy in the region,” Fuller says. “Hang in there for one more year, and you’ll be rewarded.”
After the speech, Fuller beats a quick retreat to his blue Mercedes roadster and speeds towards a corporate lunch program in Alexandria. It’s a pretty typical pace for the 70-year-old professor with the leathery sailor’s tan. Fuller estimates he has about 80 speaking engagements a year. He’s also the go-to talking head for reporters who need a quote about the latest unemployment numbers or the economic impact of federal budget cuts—not to mention pols who need to import some quick gravitas. When Mayor Vince Gray needed someone to kick off his inaugural jobs summit with an economic overview, he called on Fuller. When the state of Virginia needed a study on the effect of Defense Department spending on the area’s economy, they retained Fuller. Even the government of Portugal reached out to the dean of regional economists for help with an unemployment problem; they wanted Fuller to apply lessons learned from Washington.
In an area full of experts who prognosticate about the fate of the global economy, Fuller is the most influential economist on the area. But while he hands down reports from his perch at George Mason’s Center for Regional Analysis, he’s no ivory tower academic. At each breakfast, luncheon, and gala dinner, the affable professor schmoozes with men—and they are almost always men—who own or have built on vast tracts of Washington, Virginia, or Maryland land, checking in about projects, families, the Orioles. He’s been doing it for the last couple of decades, but has become even more closely followed in the last few years, as recession-weary builders and governments cling to the one certainty Fuller can provide: data.
“Because he is so able to conjure up facts during any conversation, he has earned enormous respect,” says Maryland economist Anirban Basu, who left academia for private consulting. “One of the worst things a researcher can find is that research is not relevant. Steve Fuller does not have that problem.”
“When he speaks, he speaks with authority, because chances are he knows the players involved and he knows the jurisdictions involved,” adds Gaithersburg developer Bob Buchanan, who’s employed Fuller for long-range economic forecasting (more on that later).
But as much as the titans of the real estate industry depend on Fuller’s economic models—as well as his academic credibility and name recognition, which not every consultant can offer—his center, which receives almost no support from George Mason, depends heavily on the generosity of the industry he informs. And, as it happens, he typically finds himself with data that bolster the need for building more housing and better highways to knit the region together—imperatives that tend to please the industry. His research is used not only to inform and guide decisionmaking, but also to advance agendas, in a symbiotic relationship without which neither party would survive.
This doesn’t mean that Fuller’s a shill for developers. He’s also trying to lead them away from the types of suburban housing they’ve built for decades, toward the denser communities sought by both empty nesters moving to smaller quarters—like he did—and young 20-somethings. All the same, the favored luncheon speaker of real estate types around the region is no smart-growth angel, either. Not everyone, he says, will move to a high-rise apartment building and ride a bike to work.
“The real world isn’t ready for a lot of these ideas. People still want three-car garages,” Fuller says, as we drive out to the breakfast in Baltimore, passing open lands that looked ripe for development. “There’s no place for Utopians in reality.”
Every region has someone like Stephen Fuller—based at a university, a federal reserve bank, or a quasi-governmental entity. It’s a field that naturally lends itself to monopoly.
“I don’t think this is a highly competitive industry,” says Howard Wial, who directs the Metropolitan Economy program at the Brookings Institution. “If you’re going to develop your own regional model, that’s a lot of work.”
If Fuller is approaching the asymptotic point for his profession beyond which one cannot grow any more influential, his rise was also smooth and rapid. Born in Summit, N.J., he went to college at Rutgers, and then took a fellowship at the University of Mississippi for his master’s (“Mississippi was really backwards,” he remembers. “The university had its problems”). From there, he took another free ride to Cornell, and came to Washington in 1967 to do research for his dissertation—but ended up staying, when George Washington University offered him an assistant professorship in 1969.
George Washington is where Fuller established himself as the pre-eminent analyst of the Washington economy—especially the influence of the federal government, which changed in the wake of Reagan-era budget cuts that decreased the size of the bureaucracy but created a bonanza of contracting and procurement. Fuller found ways to track each piece of federal spending, and how it affected jobs, private investment, and the housing market. He eventually led the university’s urban and regional planning program.
G.W.’s administration, though, was never that supportive. Local issues aren’t much admired in a university full of people who weigh in on issues of more global significance. In the 1980s, G.W. folded the planning program into the business school and stopped funding studies on the city entirely, opting to chase government and non-profit grants instead.
George Mason, on the other hand, saw Fuller—and his top-notch economic models—as a way to put their fledgling school of public policy on the map. They couldn’t offer him a lot more money, or George Washington’s prestige, but they could give him something more important: freedom. “[At G.W.], the faculty didn’t have much independence, where the opposite was the case at Mason, and still is,” Fuller says. “The environment is very permissive, and very encouraging, and as a consequence it’s a very fertile area for faculty of all kinds.”
Fuller’s old employer never replaced the regional expertise it lost when he left.
“George Washington has never seen itself as a local institution. It sees itself as a national institution,” says Garry Young, who heads up the school’s much-reduced Center for Washington Area Studies. “It is fair to say that we ceded a lot of that research. There’s only so much money to pay for this stuff anyway.”
Fuller’s new gig, though, came with a different master. The university pays his $207,000 salary, but he needs to tap clients in order to fund staff and grad students: Mason is not treated with the same generosity as the University of Virginia or Virginia Tech. “In fact, the university wouldn’t exist if Northern Virginia business leaders hadn’t invented it,” Fuller says. “The state didn’t want it. Northern Virginia kept evolving, and they found resources for it.”
In practice, it’s like bartering: The Northern Virginia Association of Realtors, for example, funds a research assistant; in exchange, Fuller and colleague John McClain will make presentations at association meetings and put together a bimonthly research newsletter. (Young says G.W. doesn’t do this because they want their grad students to be able to publish in academic journals, which they typically can’t do with research performed for private groups.)
Sometimes, Fuller lands bigger windfalls. When G.W. tried to steal him back in the early 2000s, retired George Mason president George Johnson got Dwight Schar, a wealthy homebuilder and part-owner of the Redskins, to endow a university chair for a million bucks.
Vice President for Research and Economic Development Roger Stough, who initially recruited Fuller, says the academic-industrial complex is part of George Mason’s competitive advantage. “The strategy for Mason for a long time has been to make itself useful to those interest groups so it could use their wealth to make it prominent among the universities,” he says. “Fitting into the ecology of the region so you can benefit from being a part of it.”
Is there anyone professors aren’t allowed to take money from?
“We wouldn’t take money from the Mafia,” Stough answers. “We would be very careful about taking funding for foreign sources. Social turmoil of any sort, revolutionary-type activities. That doesn’t mean that there aren’t some things where some people might say gee, there might be some question about that.“
Thus, it became Fuller’s mission to be useful.
Every region may have a Stephen Fuller, but Washington isn’t like every region. Divided among three jurisdictions, area planners’ ability to do things is further complicated by the rise or fall of Northern Virginia’s influence in Richmond, the District’s influence on Capitol Hill, and the capacity of Montgomery and Prince George’s counties to get along with each other as well as with their state legislature. To make matters worse, there is no empowered regional body—like New York and New Jersey’s Port Authority—to make them play nice.
It’s a set-up that frustrates developers, who just want the region to cooperate on infrastructure projects to serve the office parks and residential towers they need to keep building. As Exhibit A, Fuller remembers the mid-1990s fight over the Techway Bridge, which would have eased the commute from Reston to Gaithersburg with a four-to-six lane highway over the Potomac River. Smart growth types lambasted the project as an unnecessary sprawl machine, but Fuller says it actually failed because Maryland officials thought it would make it too easy to get to Dulles International Airport, stealing traffic away from BWI. (“None of these are really good reasons,” he says. “No other region in America that has this kind of coordinating problem.”)
Meanwhile, Fuller had been doing housing market research that found the region would have 200,000 more jobs than places for people to live by 2025, in large part because elected officials haven’t been willing to push local jurisdictions away from zoning restrictions that keep housing density low. And he fretted that without serious attention to the problem, Washington’s economy could be surpassed in size by places like Dallas and Atlanta—certainly a good talking point to take to people whose pride and profit margins are tied to the relative positioning of their home turf.
At the same time, Fuller was thinking about the future of his own center at George Mason.
“He said he was worried, because a lot of the old line people who had supported him were not as active as they were, and there didn’t seem to be any of the next generation who realized the importance of this,” says Bob Buchanan.
So in 2006, Fuller got together with one of his biggest supporters—attorney and Fairfax County real estate mogul Til Hazel, who built Tysons Corner—and came up with the 2030 Group: A collection of 20 local business leaders who would each kick in $20,000 for five years to fund research and outreach that would support regional transportation and infrastructure improvements. Nearly $300,000 of the money went to the Center for Regional Analysis. The broader business community was invited, but the ones who ultimately threw down were those whose fortunes were tied to the soil.
“The fact that it is dominated by people in real estate says something about their commitment,” Fuller says. “They’re third, fourth generation families. They’re paying attention to this region like most businesses don’t. There are corporate leaders in other cities. We don’t have big corporate leaders. We have very wealthy corporations, but they don’t show up for any of these meetings.”
The group launched with a splashy event at the National Press Club featuring studies about job growth and regional governance. Fuller, along with University of Maryland professor Jacques Gansler, lent enough name-brand cachet to soften the perception that a group of heavy hitters was just trying to bully regional governments into acting in their interests.
“I think we found that Steve’s credibility was important so that people did appreciate the academic credentials, and the modeling and the standards he uses,” Buchanan says.
But the brash announcement still put the establishment on edge—the group had shunned existing regional organizations because the 2030sters believed the older groups were inadequate. The Greater Washington Board of Trade has lost membership and influence over the years, while the Metropolitan Washington Council of Governments (known as “COG”) has always lacked teeth, as well as much in the way of independent spending authority.
“Basically, the political world is controlled by the anti-growth people,” said Hazel at the press conference. “We can’t let the ‘antis’ control the world.”
But those who had worked on regional planning for some time thought members of the 2030 Group just hadn’t liked the outcome, and were trying to take decisionmakers back toward highways over dense, transit-oriented development. “I’m tired of hearing about them,” snapped Coalition for Smarter Growth director Stewart Schwartz last summer. “The 2030 Group acts like nothing is happening, and no one has a plan for the future. Darn it, we do. Clearly, the 2030 Group is a return to the past.” COG sent the 2030 Group a prickly letter suggesting that it could best help by throwing its weight behind the Region Forward 2050 initiative, an aspirational plan drafted in 2009 and endorsed by a variety of local players.
Schwartz was particularly frustrated with Fuller, who had also participated in the Region Forward 2050 planning, and now seemed to disregard it. Fuller says the issues are apples and oranges.
“There’s no economic basis for 2050. It’s a wish list,” he says derisively. “It’s very valuable, it sets goals for the region, but there’s nothing in it that says what kind of housing we’re gonna need, who’s going to pay for this, and how is it going to be achieved.”
Those things, of course, can only be achieved by people with money.
Fuller’s 2030 Group adventure raises the question: Given the financial pressures on a fee-based research center, does he just tell people what they want to hear? It’s a critique that gets tossed at many economists.
“I think sometimes there’s a perception that Steve has been overly optimistic in his forecasts,” says Dave Robertson, executive director of the Council of Governments and a former student of Fuller’s at George Washington. “My guess is it’s closer to right than not.”
Some of that perception could be rooted in Fuller’s projections of massive regional growth as a result of spending on the Iraq war, which never quite came to fruition. It may also come from the fact that there is always an upside to forecasting in the Washington region—the federal government keeps the lows from getting too low, and makes happy projections a generally defensible bet. To be fair, he did sound notes of caution during the go-go years of 2005 and 2006.
But Fuller knows his reputation. “Someone told me the other night that they discount whatever I say by 10 percent,” Fuller says, noting that most economists are pessimistic and the media is always reporting negative news. “I’m a glass-is-half-full person about life. And I’m trying to provide some balance.” He prefers to say he’s “enthusiastic,” not optimistic; either way he says he looks at data analytically.
Then there are the studies that just pay the bills: Industry groups need data to support their interests, and Fuller can supply it. He did work for the Capital-to-Capital Coalition, which used his economic analysis to support United Airlines’ bid for a nonstop air route between D.C. and Beijing. In 2003, he performed a study for the pro-development Citizens for Property Rights concluding that density restrictions put in place for environmental purposes had impeded Loudoun County’s economic growth. In 2004, the Corcoran Gallery of Art—of which Til Hazel is a board member—commissioned a study on the economic impact of its proposed expansion (the verdict was positive).
That’s not to say Fuller fudges the numbers. But it’s probably fair to say that paying gigs like that wouldn’t come in the first place if the client didn’t expect a certain result.
To Fuller, it makes perfect sense to just answer the questions that are asked.
One of Fuller’s side jobs is serving as an expert witness in court cases, many of which are brought by developers against local governments that don’t want to allow denser growth. Fuller makes the case for the positive economic impact of rezoning. The one he found most exciting, though, was testifying in the trial of serial murderer John Lee Muhammad. The prosecution charged him with economic terrorism, and brought in Fuller to talk about how the local economy had suffered because people were too afraid to go outside and shop. Asked whether sales had been depressed, Fuller answered yes. What he didn’t say was that sales rebounded immediately afterwards, leaving no net effect on retailers. Muhammad was convicted.
Why didn’t he add that key bit of context? “You’re always counseled on the stand: Don’t answer a question you haven’t been asked,” Fuller explains. “You can find statistics to support almost anything.”
And then there was Fuller’s brief flirtation with Walmart, which wanted to develop an economic indicator based on what “Walmart moms” were thinking. The company ultimately decided not to go forward with it, but Fuller was intrigued by the idea of getting all the data Walmart had gathered on its female shoppers—as well as by the national exposure. And he can see the gigantic retailer’s pros and cons.
“If I were asked to make a case for it, I could make a really strong case for it, and if I were asked to make a strong case against it, I could make a really strong case against it. You do what you are asked to do, and you don’t answer other questions,” he says. “I still like to pick the side that I’m happier with.”
Despite the rarefied circles he inhabits, Fuller remains, at base, a teacher. It’s why he likes talking to reporters so much.
Last September, we sat so long in his heavily upholstered office on the ground floor of a Rosslyn condo building—he lives with his third wife, an executive at Human Genome Sciences, in an upstairs unit with sweeping views of the Washington Monument—that the room’s three chiming clocks went off multiple times before I left, forcing brief pauses in the conversation. (There are two others in his residence.)
“I used to think I could educate people,” Fuller says, his legs crossed, in an armchair. “So when I’d get the same reporter calling me over again, I’d explain why unemployment’s going to go up, and how you understand whether it’s a problem or not.”
“I go through this, and then I get the same question the next month,” he continues. “I learned a long time ago, your job is to figure out whatever it is you’re writing about and move on to the next story, you’re not supposed to remember everything you write about. But I think about you as a student, and I try to educate you.”
His actual pupils, of course, are a different story. He teaches a handful of grad students each semester, many of whom are from foreign countries. He piles on the reading assignments every week. When they’re less than chatty in class, he easily fills the silences, walking engagingly and patiently through a regional economy’s component parts.
But Fuller’s professorial mien in the classroom doesn’t mean that his center at George Mason shies away from normativity. One of their causes has long been the need for more affordable and workforce housing. Neither Fuller nor his partner John McClain—who does a fair amount of speaking engagements and media hits himself—are shy about telling local jurisdictions they need to allow more units per acre, and developers that they need to build them.
“I was totally not restrained from saying that the fact that housing prices have gone down, and the housing bubble burst and things got bad, we still have an issue in terms of providing enough housing to people that’s affordable who need to live close to where their jobs are,” McClain says. “So in terms of public policy, there’s still a lot of work to be done. The market hasn’t solved it for you, it’s still there.”
And sometimes, the NIMBY resistance really bothers them. From the window of his office in George Mason’s shiny new academic building in Clarendon, McClain points out one of the worst examples: A church-led, Arlington County-funded housing project that local groups had held up for five years on constitutional grounds. “It was really just because the local residents didn’t want more affordable housing,” McClain says.
It’s a struggle, sometimes, to get people to think of themselves as citizens of a region defined by its natural economic boundaries, not artificial political ones. It’s been Fuller’s life’s work, and he’s retiring soon. So he’s even more eager to get the message out.
“This city is laid out closer to Los Angeles. It’s an automobile-based city, it’s not a northeastern city,” Fuller says. “People have a hard time thinking urban. They don’t think they’re in a city with five and a half million people. They haven’t figured this out yet, that this is a big place. The future’s gonna happen, and we’re just not ready for it.”