Experts: Hampton Roads economy due for decline

The Hampton Roads economy, plagued by rising jobless claims and drops in port traffic, taxable sales and new home construction, will continue to decline through the third quarter of this year, a team of economists at Old Dominion University said Monday.

The region lost 0.8 percent of its jobs during the first five months of the year compared with the same period in 2008.

The losses were concentrated in the retail, construction, manufacturing and financial services sectors.

"Like their national counterparts, Hampton Roads employers struggled with declining demand for services and products, rising inventory and a significant tightening of credit availability," the economists wrote in their quarterly report.

The economists predict unemployment in the region will inch up to 7.1 percent during the third quarter, an increase from 7 percent.

While most sectors are predicted to remain in decline through the third quarter of this year, the economists predicted slower declines as the year progresses.

"The overall level of job losses is expected to fall in 2009 as the economy begins to claw its way out of recession," they wrote.

Taxable sales have fallen about 6 percent so far this year compared with a year ago, the economists determined. Sales will be down 5.8 percent during the third quarter, they predicted.

Port traffic, which was down 23.3 percent during the first five months of the year, is expected to be down 20.2 percent during the third quarter.

The dollar value of permits for new single-family homes will be down 29 percent during the third quarter, the ODU economists said, as home builders continue to rein in construction amid excess supply.

Meanwhile, the region's tourism industry seems to have weathered the decline better than the national average.

Hotel-room revenues for the January-through-May period were down 5.5 percent from the year-earlier period. Nationally, hotel revenue dropped by an estimated 16.1 percent over the same period, the report said.

"If people decide to drive rather than fly on vacation, this area tends to do better," said Vinod B. Agarwal, one of the ODU economists.

Josh Brown, (757) 446-2318, josh.brown@pilotonline.com