Tuesday, June 6, 2023

Economic Forecast Shows Improvements Following The Pandemic

NEWPORT NEWS—The Virginia Peninsula Chamber of Commerce hosted the 2021 Mid-Year Economic Forecast Breakfast on Thursday, June 17 at Newport News Marriott at City Center. Dr. Vinod Agarwal and Dr. Robert McNab, economists from Old Dominion University’s Strome College of Business and the Dragas Center for Economic Analysis and Policy, presented their findings to a packed house.

A large part of the presentation centered around the effects of covid-19 and the impact it had on the local economy. Unemployment, reduced sales, and an increase in consumer goods pricing have taken their toll, but vaccine rates and reduced restrictions on social distancing are contributing to encouraging employment numbers moving forward.

However, consumer goods pricing and demand both continue to rise, leading to what is being referred to as a “K-Shaped” recovery and “Disproportionate Shock.” Key notes include:

  • Relative to the share of the population, Black individuals were more likely to be hospitalized and die from covid-19.
  • The economic shock disproportionately impacted Black and Hispanic workers relative to Asian and White workers. Women exited the labor force and their employment declined at higher rates than men.
  • Salaried workers were largely shielded from job losses, and hence, losses in income and wealth.
  • Workers in relatively labor-intensive industries were largely unable to work remotely and experience higher rates of furlough and job loss.
  • Increases in median housing values and rental prices coupled with increasing gas and food prices continue to undermine income gains of the past decade for many groups.

The overall outlook is showing improving growth, but challenges still remain:

  • Covid-19 vaccines continue to drive improvements in business and consumer sentiment.
  • Vaccine hesitancy and resistance will lead to local outbreaks of covid-19.
  • Supply-chain constraints will challenge sectoral growth through 2021.
  • A “Relief Cliff” is coming in September as many covid emergency programs expire.
  • Additional stimulus is unnecessary and would increase inflationary expectations.
  • Disinformation and media-driven politics have created enclaves of Americans with separate world views.
  • Even with these challenges, the United States and Virginia will experience a robust expansion in economic activity and jobs in 2021.

According to the report, Hampton Roads Real Gross Domestic Product is forecasted to rise from -2.5 percent in 2020 to 4.8 percent in 2021. Civilian Job Growth will rise from -5.3 percent to 2.3 percent. The Unemployment Rate will drop from 7.1 percent to 4.6 percent. Taxable Sales will drop slightly from 6.7 percent to 6.6 percent. Hotel Revenues will rise from -35.3 percent to 43.6 percent. General Cargo Tonnage will rise from -3.9 percent to 12.9 percent, General Cargo TEUs (Twenty-foot Equivalent Units, i.e., cargo containers) will rise from -4.2 percent to 16.8 percent, and One-Unit Housing Permit Value will drop from 10.9 percent to 7.4 percent.

To review the full report, visit www.ceapodu.com.

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