Andrew Tompkins
Contributing Writer
According to the Old Dominion University Economic Forecasting Team, the Hampton Roads area is projected to see an increase in real gross regional product of about 1.97 percent over the next year. The team comprised of three ODU business faculty members; professor Vinod Agarwal of economics, finance professor Mohammad Najand and the newest member to the group who joined this semester, professor of economics, Gary Wagner. Each year the ODU Economic Forecasting Team researches data and creates an annual Economic Forecast for the Hampton Roads region. The team presented their findings on Jan. 25 during Old Dominion’s Economic Outlook Conference at the Norfolk Waterside Marriott. With 350 registered attendees, it is clear that local businesses have an especially vested interest in knowing the region’s fiscal prediction. As one of the few regional forecasting groups in the area, the findings are widely respected as an excellent indicator of the coming year’s economic outlook.
Hampton Roads is a distinctive area in that it has a unique combination of privatized and governmental contracting. As one would guess, the single largest factor that affects the Hampton Roads region specifically is the amount of military spending from the national budget.
“Department of Defense spending accounts for roughly 46 percent of total output for this area,” professor Agarwal said.
When the national economy picks up steam and continues to improve, so do smaller communities and regions. Areas like Hampton Roads get a lot of help thanks to heavy government spending as well. According to the national yearly forecast, the Department of Defense spending will be roughly the same as last year’s which means an estimated direct flow of about $20.75 billion of spending into the area. Consequentially the regional forecast predicts an encouraging change in a number of areas including a decrease in the unemployment rate and increases in hotel revenue (+2.6 percent), taxable sales (+3.8 percent), and general cargo tonnage (+2.9 percent). This translates to a projected increase in tourism income and port and shipping revenues. Though the projected increase in real gross regional product is below the region’s historical average annual growth rate of 3.2 percent it seems the economy is taking a turn for the better.
One facet of the financial system that continues to struggle is the housing and building permit market. Building permits for new residential construction projects are expected to decline over 11 percent in 2012, reflecting continued repercussions from the housing market crisis a few years back.
With a predicted drop in the unemployment rate for Hampton Roads from 7 percent to 6.2 percent in 2012 this news is especially encouraging for ODU students. For comparison, the projected national unemployment rate will likely hover around 7.9 percent. Students who are currently looking for a job or graduating in 2012 are faced with a much better regional job market than last year. Additionally, since the economy is predicted to grow in tourism this could spark an arrival of new jobs particularly in the summer and spring seasons. Even with the predicted drop, the unemployment rate is still one of the highest for Hampton Roads in the past decade. Local businesses may also see a growth in the coming year but likely not a substantial one.
“Local businesses should be growing, but not all sectors are expected to grow, it is possible local government sectors may continue to lose jobs,” explained Agarwal.
Since the economy has been recovering slower than expected it will take time to see what kind of impact this will have on the region. Even though the forecast team has projected growth in many areas, the growth may take place at a much slower than normal pace. It is clear by looking at the findings and projections that there is still a significant economic problem in the community. Ideally, the Hampton Roads community will continue to improve directly with the national economy. Students can look up the findings and view the actual presentation by going to the Forecasting Project’s Website at www.odu.edu/forecasting.
