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You Visit Tour. Webb Lion Fountain. June 1 2017. Photo David B. Hollingsworth

“It’s Morning Again:” ODU Economists Offer Positive Outlook for Hamptons Roads

Old Dominion University economists Robert McNab and Vinod Agarwal said the region is experiencing an economic resurgence and has mostly recovered from the recession that began in 2008 during the 19th State of the Region Report. Housing prices are rising and the number of jobs has increased.

"It's morning again in Hampton Roads," they said, which channeled the slogan "It's morning again in America," an optimistic phrase from a 1984 political campaign television commercial for President Ronald Reagan's re-election effort that boasted on an improved U.S. economy.

This year's report, produced by the University's Dragas Center for Economic Analysis and Policy, provides up-to-date data on the traditional signposts of the region's economic health — Department of Defense spending, tourism and the Port of Virginia.

In addition, chapters on craft brewing, international immigration, the transformation to a skills-based education in Hampton city schools and social media help round out the snapshot of the region. As it does every year, the State of the Region report aims to stimulate thought and conversation on how to make Hampton Roads a better place to live.

The Great Recession, nearly flat defense spending and the loss of workers to other regions — combined with a reluctance to work collaboratively within the region — has caused the economic recovery in Hampton Roads to lag behind the rest of the United States.

Of the 212,000 new jobs created by May 2018 in Virginia compared to the pre-recession peak, only 2,600 were created in Hampton Roads.

However, indicators of the financial health of Hampton Roads are stronger than they have been in a decade. The Dragas Center suggests economic growth in Hampton Roads will be 2.2 percent in 2018, more than double the 2017 actual economic growth rate, thanks to increases in defense spending, port activity and growth in the tourism and real estate sectors.

McNab, professor of economics and director Dragas Center, said during the presentation that Hampton Roads is back in business.

"Today, I'm pleased to report that there's more people in the labor force in Hampton Roads than ever before, there are more people working in Hampton Roads and finally we have recovered all the jobs lost due to the recession and defense sequestration," he said.

Real GDP growth in Hampton Roads ranked 312th among 382 metropolitan areas from 2011 to 2016. The 2018 State of the Region suggests this trend could be changing.

"The more we work together, the better off we are," McNab said. "It's not just a single-city discussion, it's us as a region. The opportunity exists for Hampton Roads to improve collaboration, seek out administrative efficiencies and promote regional development."

A controversial topic tackled by this year's State of the Region report is the impact of Medicaid expansion in Hampton Roads.

Effective Jan. 1, 2019, the commonwealth will extend Medicaid eligibility to approximately 400,000 more Virginians. Between 15,000 and 27,000 newly eligible adults in Hampton Roads are expected to enroll in Medicaid once expansion is fully implemented.

This is seen as a potential benefit for many residents, but also stands to increase costs of Medicaid administration in the region. The large military concentration in Hampton Roads means that a sizable percentage of the population already receives health-care benefits through their Department of Defense employment or through Veterans Administration benefits.

McNab said Virginia's decision to expand Medicaid will undoubtedly impact the overall picture of health-care insurance and services in Hampton Roads.

"If we look at the data, in Hampton Roads rates range from a low 5 percent in Williamsburg to a high 14.5 percent in Norfolk," McNab said. "This means that Medicaid's impact in Hampton Roads will not be even. Where there's more uninsured, there will probably be a greater potential uptake in terms of Medicaid expansion."

The subject of how the region's schoolchildren are educated is looked at in the State of the Region in a case study of how schools in the City of Hampton have reoriented curricular focus to skills-development outcomes through the Academies of Hampton.

At the start of the 2017-18 school year, every ninth-grade student was assigned to a freshman "academy" of about 100 students, helping them explore their professional and academic interests. At the end of the seminar, they develop a 10-year plan for their future and decide which college and career academies they might like to attend the following year.

Students enrolled in career academies often have lower dropout rates, better attendance and higher grades than their peers. They may be more likely to attend college, or to find meaningful employment after graduation. The report authors noted school board officials in other Hampton Roads districts are watching Hampton's academies experiment closely to see if it is a model worth replicating.

Another chapter in the report examines the rise of multifamily housing in Hampton Roads.

With home ownership rates unlikely to rise to pre-Great Recession levels, there is a large inventory of multi-family homes in the region, and new construction of the apartments and condominiums has slowed noticeably. State of the Region authors note that this will largely correct the oversupply of these units in the local marketplace, allowing the units to continue to play their traditional role of an entry into real estate ownership for first-time buyers.

The final chapter in this year's report provides a snapshot of social media in the region, suggesting the divides between the various communities of Hampton Roads has translated into a lack of a cohesive regional identity in the popular online programs. Contrast this with Richmond's #RVA branding initiative, and the opportunity for Hampton Roads to promote itself collectively to a virtual audience has been suppressed.

The report also included chapters on international immigration and the rise of craft brewing in Hampton Roads.

In addition to the State of the Region report, the Dragas Center State of the Commonwealth Report will be released later this fall, and an annual economic forecast will be presented in late January. The Center also produces a monthly economic update focusing on labor market conditions in Hampton Roads.

Every State of the Region report, including this year's, is available on the Dragas Center website.

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