ODU Economists Deliver Peninsula-Specific Forecast in Newport News
May 16, 2017
As Larry "Chip" Filer took the microphone at the start of Old Dominion University's Peninsula Economic Forecast on May 16, a sonic boom of feedback caused audience members to momentarily cover their ears. When the noise mercifully ended, Filer waited a beat and then deadpanned: "That right there sums up our national economy. Chaos, anarchy."
The lighthearted remark brought laughs from the capacity crowd at the Newport News Marriott at City Center. But it also highlighted the uncertain economic environment both in the United States and Hampton Roads.
Filer, associate professor and chair of the Department of Economics, and Vinod Agarwal, professor and director of the Strome College of Business Economic Forecasting Project, outlined 2017 national and regional economic forecasts tailored to a Peninsula audience. The event was presented by Chartway Credit Union and the Virginia Peninsula Chamber of Commerce.
Filer delivered the national forecast, as he had in January in Norfolk.
He said the national economy has recovered completely from the 2007-09 worldwide economic slowdown, but pockets of difficulty are still causing a drag on growth. These include the uncertain environment for Department of Defense funding, a factor that disproportionately affects Virginia.
"Really, since the start of sequestration (the government-mandated reductions in federal spending), it has caused big headwinds for Virginia," Filer said.
Running through key economic indicators, Filer stopped on a slide with a graph featuring two lines moving largely in tandem. Filer said they represent the national unemployment rate and the so-called U6 rate (unemployment plus workers leaving the workforce). The ODU economist noted that the gap between the two figures has dropped to nearly its lowest level since before the economic slowdown.
"The gap between these two lines is very informative. As the lines move closer together, it suggests our economy is moving closer to true 'full employment,'" Filer said.
Kicking off the Hampton Roads forecast, Agarwal suggested it's impossible to analyze local economic indicators without considering national issues like defense spending and the trade deficit. "We don't live on an island here; it's all connected," Agarwal said.
He predicted the Hampton Roads economy will grow by 1.41 percent in 2017, noting that a lag in job recovery in southeastern Virginia puts its overall economic growth below rates predicted for the nation as a whole.
"The labor market is moving in the right direction. We should reach the 2007 peak next year. But it's taken a decade for us to catch up to pre-recession employment levels in Hampton Roads," Agarwal said.
The ODU economist highlighted positive indicators in the local economy, including a "near capacity" Port of Virginia and a real estate market that has almost fully recovered from the slump in housing prices caused by the slowdown.
Old Dominion University's Economic Forecasting Project produces widely respected national and regional economic forecasts, seen as an impartial harbinger of economic activity for the year ahead.
ODU's economic forecasting team also produces a "dashboard" of key economic indicators such as real GDP and the unemployment rate, which is updated as new reports are made available. The DASHBOARD is available online at the Strome College's Center for Economic Analysis and Policy.