ODU's Agarwal Points to Defense Expenditure as Key Indicator of the Health of Hampton Roads Economy
For the Hampton Roads region, an economic update consists of one thing more than any other - an update on the state of military spending.
In a presentation Tuesday, July 8, at a networking event sponsored by the Daily Press business publication TidewaterBiz, Vinod Agarwal, interim dean of Old Dominion University's Strome College of Business, warned that private sector economic growth will have to accelerate to keep growing the economy in a time of flat or even reduced military expenditure.
Showing a graph with year-over-year increases in military spending completely flatlining in 2011, Agarwal said Hampton Roads can't expect the average 6.1 percent annual increase in defense spending that occurred from 2000 to 2010. "My friends, those days are gone," Agarwal told the audience of more than 150 Peninsula business leaders.
The TidewaterBiz networking event featured presentations about the regional and Hampton economies, along with a presentation about the future of Fort Monroe, host site for the event. Besides Agarwal, other presenters included Mike "Yaz" Yaskowsky, senior development manager for Hampton's Department of Economic Development, and John Hutcheson, executive deputy director of the Fort Monroe Authority.
In his short presentation, Agarwal said the leveling off of military spending has been partially offset in the region by gains in other sectors, notably the Port of Virginia. But with still 42.2 percent of the region's economy comprised of direct military spending and its spinoffs, Agarwal said for the economy to grow, other sectors will have to perform strongly.
"The private sector has to start growing at a much faster pace to maintain our standard of living," he said.
Agarwal is director of the Economic Forecasting Project at ODU, which is known for annual regional and national economic forecasts that are accurate harbingers of the year ahead.