Hampton Roads economy among nation's strongest

Facing the worst downturn in more than a half-century, some Hampton Roads businesses scrapped or postponed projects. Some laid off employees.

The region, however, has weathered the recession better than many parts of the country did. In a series of reports on economic activity in the nation's 100 largest metro areas, the Brookings Institution, a think tank based in Washington, D.C., said the Virginia Beach-Norfolk-Newport News region ranked among the top 20 areas in performance.

Hampton Roads was one of only a half-dozen where the output of goods and services surpassed their pre-recession peak by the summer of 2009, noted Brookings' Metropolitan Policy Program in a report for the July-through-September period. The Brookings program evaluates the strength of metro areas according to changes in their employment and jobless rates, output of goods and services, and home prices.

One reason Hampton Roads compared so favorably was the heavy federal spending in the region, including spending for the military, economists said.

"That steady stream is what has kept us afloat" during the downturn, said Greg Grootendorst, chief economist at the Hampton Roads Planning District Commission.

Like many metro areas, Hampton Roads also benefited from federal stimulus programs, including the tax credit for first-time homebuyers and the Cash for Clunkers incentive for new-car purchases. Still, the pace of business activity in the region varied widely, and some sectors, including construction and manufacturing, struggled during 2009.

At Chesapeake Bay Steel Inc. in Norfolk, "we have the federal government, which accounts for a substantial amount of our backlog," said Ira Armstrong, executive vice president of the steel fabricator. The company also relies, however, on commercial and municipal projects, including school construction, he said, and those sources of business were weak in 2009.

While Hampton Roads' jobless rate climbed sharply from what it was in 2008, the rate remained well below the average for the country's major metro areas, according to Brookings' reports. For the July-through-September quarter, the region's unemployment rate was 6.7 percent - almost 3 percentage points below the 9.6 percent average for the 100 largest metro areas.

In addition, the number of jobs in Hampton Roads contracted by 2.2 percent between the summer of 2007 and the summer of 2009. However, that was less severe than the 4.3 percent average decline over the same period for major metro areas, Brookings said.

The pace of recovery in Hampton Roads is likely to be subdued, in part, because the downturn in its economy was less severe than what other regions experienced, said Grootendorst of the Hampton Roads Planning District Commission.

Still, signs of improvement are appearing in some hard-hit sectors, including port traffic and home-building, Old Dominion University's Economic Forecasting Project said in its outlook for the region's economy during the 2009 fourth quarter.

After sharp declines in late 2008 and through much of 2009, the general cargo tonnage handled by Hampton Roads' port would grow 2.4 percent during the recent quarter from the comparable period in 2008, the ODU forecasters said in their November outlook for the quarter. And the value of building permits for single-family homes in the region would edge up 0.5 percent as sales of existing homes accelerated, they said.

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