ODU Economists See Promise in Region's Economic Recovery
October 04, 2017
By Jon Cawley
Old Dominion University economists painted a cautiously optimistic picture of Hampton Roads' economic recovery from the Great Recession a decade ago in the 18th annual State of the Region report.
They presented their findings Oct. 4 to several hundred of the region's business and political leaders at the Hilton Norfolk The Main. A second presentation will be made Oct. 6 at the Newport News Marriott at City Center. Register online for the Newport News event through host sponsor LEAD Hampton Roads.
The report, which is prepared by the University's Center for Economic Analysis (CEAP) and Policy at the Strome College of Business, is a widely respected and impartial analysis of the economic issues facing Hampton Roads. It aims to stimulate thought and conversation on how to make Hampton Roads a better place to live.
This year's report was co-edited by James V. Koch, the Board of Visitors professor of economics and president emeritus, and Robert "Bob" McNab, professor of economics and deputy director of CEAP. They were joined in presenting the findings by Vinod Agarwal, professor of economics and director of the University's Economic Forecasting Project.
"We are starting to see signs that we may be turning the corner and making progress out of the Great Recession and the impact of defense sequestration," McNab told the audience. But he added that the news is tempered by a "somewhat sluggish" recovery of jobs lost to the economic downturn.
More people are working in Hampton Roads than ever before — more than 821,000 as of July 2017 — and that is "progress indeed," McNab said.
The challenge, he said, is "how do we retain talent that is graduating from public universities in the area and attract talent for the future?"
Defense spending, which makes up nearly 40 percent of the region's gross domestic product, has been relatively stagnant since 2011 but is projected to slightly increase in 2017.
"That is a strength we should continue to leverage," McNab said, while cautioning that uncertainty in Washington may create headwinds in Hampton Roads. "BRAC is coming," he said, referring to future proposals to close or downsize bases. "Working as a region is necessary."
The Port of Virginia marks a bright spot in the region's economic growth, exceeding pre-recession levels thanks in large part to state investments to increase the port's capacity.
"Rail traffic is increasing from the port," McNab said. "That means the port has gotten larger, is more competitive and is doing well in comparison to other industries."
But the region's housing market continues to lag behind pre-recession levels even though median sales prices have increased. With the region's inventory of distressed homes clearing out, McNab said he expects further increases in sales prices.
The recession and sequestration also affected the tourism and hotel industry in Hampton Roads in recent years and the region has not yet caught back up, Agarwal said. Virginia Beach and Williamsburg are the only two localities in the region that have seen growth in revenue per available room.
Agarwal also discussed the rise of AirBnB and similar firms that facilitate private home rentals, which have seen a five-fold increase in properties since 2015 and could grow to 3,000 by 2018 if the trend continues.
"The hotel industry needs to adjust their behavior if they want to survive," Agarwal said.
Koch's presentation covered tuition and fees in higher education as well as the growing epidemic of opioid abuse and its effect on the economy.
According to the report, Christopher Newport University leads Virginia's four-year public institutions in average net price of attendance — the average of what students actually pay, after grants — at $22,029, followed by Virginia Commonwealth University and the University of Mary Washington at $19,898 and $19,864, respectively. The net price of attending ODU, in comparison, was $15,236. The University of Virginia Wise had the lowest net price in the state at $11,259.
"Tuition and fees are going up more rapidly than other prices, even health-care prices," Koch said. "It's literally pricing people out of higher education."
While Virginia is below the national average for opioid-related deaths — at 6.6 deaths per 100,000 population annually — the problem is posing great economic risk, straining the active labor force. Additionally, several cities in Hampton Roads are above the Virginia average for opioid-related deaths, highlighting the need for a regional, state and national response to the opioid crisis.
"It's a societal problem, a condition that is beginning to eat away at the economy and portions of society," Koch said.
Other topics covered in the report include:
Changing Delivery of Health Care: Health care in the region increasingly is being delivered by non-physician professionals, who include nurses and physician assistants. The report traces the development of this trend and its implications;
The Decline of Foreign Language Instruction: Foreign language instruction has declined in Hampton Roads, and immersion programs are relatively rare. This could hamper the ability to conduct international trade, understand world developments or even communicate with other Americans; and
Do We Suffer from a Brain Drain? Hampton Roads has been experiencing net outmigration of individuals to other metropolitan areas in recent years. Who is leaving and why?
The report is available in full on the Center for Economic Analysis and Policy website.
In addition to the State of the Region report, the Center for Economic Analysis and Policy produces a State of the Commonwealth Report, which will be released later this fall, and an annual economic forecast, presented in late January. The center also produces a monthly economic update focusing on labor market conditions in Hampton Roads.