ODU forecast: Economy to stay slow till end of '09

Job losses, depressed retail sales and falling hotel-room revenue will continue in Hampton Roads through the end of the year, but a resurgent U.S. economy will slow the decline, an economic forecasting team at Old Dominion University predicts.

The national economy's upturn will spur home-building and growth in the volume of Hampton Roads' maritime cargo, ODU's Economic Forecasting Project said in a report for the October-through-December quarter.

The decline in Hampton Roads' economic activity has been tempered by the military's presence and increased Defense Department spending, the report said. ODU's economic forecasters expect defense-procurement spending, ranging from ship repairs and supplies to construction of piers, to climb 14.3 percent this year, said Gil Yochum, an ODU economics professor and director of the forecasting project, on Tuesday.

Still, Hampton Roads' employers have struggled with declining demand, rising inventories and significant tightening of credit, the ODU report noted.

As a result, the region's jobless rate probably will jump to 6.8 percent for the current quarter from 4.9 percent in the same period last year, the report predicted. In September, the unemployment rate edged up to 6.7 percent from 6.6 percent in August.

Meanwhile, the number of civilian jobs in Hampton Roads will contract by about 2,300, or 0.3 percent, from 767,060 jobs during last year's fourth quarter, the report predicted.

"I think we will pull out of this a little earlier than the country," Yochum said, but sustained job growth won't materialize in Hampton Roads until "somewhere around the second quarter."

Hobbled by declining household wealth, tighter credit and increased household savings, the region's retail sales for the current quarter will shrink almost 1 percent from the already depressed level of last year's fourth quarter, ODU's economists said in their forecast. For the nine months through September, taxable sales in Hampton Roads were down 6.3 percent from the comparable period in 2008.

In a State of the Region report published by ODU's Regional Studies Institute in October, forecasters estimated that the net worth of Hampton Roads households contracted by almost 17 percent - about $47 billion - last year. Because of that decline, the region's households probably reduced their consumption by $1.88 billion, they said.

In the housing sector, prices will continue falling during the quarter because of an excess supply of single-family homes in the region, the ODU report said.

"Even though home prices have fallen, the price decline has not been enough to reduce inventory significantly," it said. For the nine months through September, sales of existing homes declined 4.8 percent from the year-earlier total while the average time on the market rose almost 10 percent to 88 days, the report said.

Hampton Roads' hotel-room revenues fell 5.6 percent for the year through Sept. 30, but that was better than the estimated 15.5 percent decline for room revenues nationwide, the ODU forecast said. For the current quarter, room revenues in the region will drop 2.1 percent from the year-earlier volume of $114.4 million, it said.

In the maritime sector, cargo tonnage handled during the current quarter will increase 2.4 percent from the volume in last year's fourth quarter, according to the forecast. However, the comparison is with a weak quarter last year when global trade contracted and tonnage fell dramatically.

For the year through Sept. 30, cargo tonnage handled in Hampton Roads plunged almost 21 percent from the year-earlier period.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com