Presenting a snapshot of the local economy in 2019, Old Dominion University’s annual State of the Region Report expressed a cautiously optimistic view about Hampton Roads.
Robert M. McNab, director of ODU’s Dragas Center for Economic Analysis and Policy, told a sellout crowd at the Marriott in downtown Norfolk that economic growth might approach 2.5 percent 2019 and 2020, if slowing global growth and the impact of trade, immigration and tax policies don’t drag the United States into a recession.
However, “most of the economic news is positive but we would be remiss if we did not point out that challenges remain,” McNab said.
Private sector job creation still lags here compared to similar-sized metro regions. Skilled young people continue to leave the area. And the prospect of even a levelling off of Department of Defense spending poses a persistent threat.
The 20th State of the Region Report, produced by ODU’s Dragas Center for Economic Analysis and Policy, features an in-depth look at the local economy, as well as chapters on topics of interest, ranging from marijuana legislation and enforcement, to women’s leadership, to soccer.
Joining McNab for Wednesday’s presentation were James V. Koch, President Emeritus of Old Dominion University and the State of the Region founder, and Dragas Center Chief Administrative Officer Barbara Blake.
The economic presentation focused on the “three pillars” of the Hampton Roads economy – defense (by far the largest), the Port of Virginia and tourism. Though military and federal civilian employment has shrunk to fewer than 140,000 (with offsetting job gains in the private sector), the region still has an outsized dependence on the federal defense budget with an estimated direct spend of $22.1 billion for 2019.
This figure is dependent on factors that reside far outside our region.
“The 2020 presidential election, a potential withdrawal from Afghanistan, the continued rise of China, the challenge of North Korea and uncertainty in the Middle East will challenge defense budgets,” McNab said.
Because of the uncertainty associated with future defense expenditures, the report authors urged (as they do most years) innovators in Hampton Roads leadership to look for opportunities to diversify the local economy.
One particular 2019 economic event the State of the Region examined in detail is the Something in the Water music festival hosted on the Virginia Beach Oceanfront in April.
Economists found increased hotel activity connected to the festival, part of a strong year in the local hospitality industry. Surprisingly, the benefits were tangibly realized in communities farther from the Oceanfront. Hampton/Newport News and Williamsburg, respectively, saw a greater percentage change for the last weekend in April than Virginia Beach.
“Something in the Water was more than music, it was big business,” McNab said. “With the prospect of Something in the Water returning to Virginia Beach in 2020, the economic benefits to the region are unmistakable, and there is a strong economic incentive to work together to increase the visibility, hospitality and impact of the 2020 event.”
The State of the Region report noted that Austin’s South by Southwest started even more modestly, with 700 attendees in the 1980s, and has grown to an annual festival which attracts tens of thousands of visitors to the Texas capital.
For two decades, Old Dominion University’s influential State of the Region Report has provided a thorough, engaging look at life in Hampton Roads. In addition to comprehensive annual financial data, the report has helped start critical conversations about issues facing southeastern Virginia, from regionalism to sea level rise to opioids.
The 2019 State of the Region Report, as well as previous years’ reports, are available on the Dragas Center website.federal federal contracts