The 12th Annual State of the Region Address was presented by Dr. James Koch, president emeritus of Old Dominion University and professor of economics, at the Norfolk Waterside Marriott on October 4. The event, hosted by LEAD Hampton Roads, a program of the Hampton Roads Chamber of Commerce, attracted more than 700 business and community leaders.
“We need to grow the economy, it may take a decade of hard work,” Koch warned. Compared to the rest of the country, Koch said, “We’re doing better, but we’re not doing near what we used to.” Our region’s median household income is above the national average and our unemployment rate is lower.
Our outlook is foggy he said, adding, “Defense spending will have a lot to do with this.” “46% of our local economy is Department of Defense. We’re more dependent on DOD spending now than ever before.” He added that Hampton Roads might be in store for another BRAC. The loss of an aircraft carrier group to this region is worth $900 million annually. The cost of major weapons systems has skyrocketed, so we won’t be able to buy as many jets, carriers, etc. “We won’t be able to afford these,” Koch said.
Dr. Koch said that huge deficits accompanied by uncertainty on key issues like financial regulations and health care are causing companies to “hunker down.” He urged that we must reform our tax structure and broaden the income tax base, invest in the labor force and education, increase research and development, and focus our defense spending. He showed the crowd graphs of some other countries that went through recessions. Many countries took 10-20 years to recovery. Koch said, “If it takes us this long, we’re in trouble.”
On the topic of housing, Koch noted that there is a boom in apartment development. Apartment vacancies are low and the rental costs are higher compared to other regions our size. In 2011, three out of eight houses sold were “distressed,” meaning sold through foreclosure or a short sale. Housing is now affordable, but “We are several years away from the housing market recovering.” Koch noted that there are a lot of unsold homes in the region and there are many people who haven’t put their homes on the market because they don’t think they can sell them for the right price.
Koch also noted that tourism didn’t do as well in the last two years. The Historic Triangle really suffered, however the Virginia Beach resort area fared better.
“We are highly interdependent,” Koch said. He noted that the majority Hampton Roads residents do not work in the city in which they live. Transportation is key to this region he said. He warned though that placing heavy tolls on bridges and tunnels, may isolate and reduce mobility. Instead, he mentioned that the state’s gas tax hasn’t been raised since 1986, suggesting money from this could help construction projects.
Other topics covered in the 2011 State of the Region include the plight of African American Men in Hampton Roads, WHRO marking its 50th anniversary, economic growth for the Eastern Shore, K-12 Independent Education on the Peninsula, and local television news coverage. All 12 of the State of the Region reports can be viewed at www.odu.edu/forecasting.
Dr. Koch will present the report on October 7 at the Newport News Marriott at City Center.