ODU forecasters lower estimate of region's growth

By Tom Shean
The Virginian-Pilot
© September 9, 2011

Defense spending, which cushioned the region during the recession, will continue growing in Hampton Roads this year but at its slowest pace in more than a decade, a regional forecast said Thursday.

Meanwhile, rising household income and increased net worth will probably foster greater household spending, Old Dominion University's Economic Forecasting Project said in its latest forecast for Hampton Roads.

That won't be enough to fuel significant growth in the region's output of goods and services this year. Hampton Roads' inflation-adjusted output will increase only 1.9 percent, rather than the 3.1 percent they predicted earlier this year, ODU's forecasters said.

The prolonged period of job losses in Hampton Roads will moderate, the forecasters said, partly because of greater hiring in the private sector. After adding only 300 jobs during the January-through-March quarter, private employers created 2,200 jobs during the April-to-June quarter, they noted. One factor that has hampered the job market throughout 2011 has been the cutback in local-government employment.

In Hampton Roads' housing market, conditions will remain bleak for the balance of the year, ODU's forecasters said in their outlook for the July-through-September period.

"Even though the median price of existing homes has decreased, this decline has not been enough to reduce inventory significantly," the latest forecast said.

For the seven months through July, the median price of existing homes fell more than 12 percent from the comparable period in 2010, it said. However, sales of existing homes from January through July rose only 2.7 percent from the same period of 2010, according to the forecast.

After a negligible increase in 2010, hotel-room revenue during the first half climbed almost 5 percent from the year-earlier period, the ODU forecast said. The improvement, however, was uneven. Revenue was up 12.5 percent in the Chesapeake/Suffolk market and 9.5 percent in Virginia Beach but down 1.3 percent in the Williamsburg market, forecasters said.

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

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