NORFOLK, Va. (WAVY) — Heading in 2022, Virginia’s economy continues to recover from the COVID-19 pandemic but Hampton Roads is doing so slower than other metro areas, according to a new study.
Old Dominion University released its seventh annual State of the Commonwealth report, which says economic activity is rebounding from 2020.
“COVID and the economic recovery are two sides of the same coin,” said Dr. Bob McNab, who is the director for the Dragas Center for Economic Analysis and Policy at ODU. “The infections have ebbed and flowed in Virginia; so has job growth. Now with the rise of the omicron variant, we’re probably going to see a slowing of economic activity after the Christmas season. That doesn’t mean prospects for growth in 2022 are dimming.”
McNab says the COVID strategy and increasing number of vaccinations have helped with spending across the commonwealth.
“If we think about the recovery in Virginia, what we’ve seen over the last year is that infections and job growth are closely tied. When infections rise, consumers become more cautious about going out to restaurants, bars, and stores. Economic recovery slows.” he said.
While $4 out of every $10 in Hampton Roads is from the federal government, according to McNab, he says many thought the government’s investment into the area would be enough of a cushion for the pandemic.
But the massive hit the leisure, tourism, and hospitality industry took was too much, and they’re still slowly recovering.
Attracting and bringing private-sector jobs to the area is needed, and it’s the “same, sad song” that was there before the pandemic, according to McNab.
“It’s something Virginia has to worry about, and Hampton Roads in particular, because if people follow jobs and Hampton Roads is not generating jobs, at some point in the coming decade, we’re going to start losing population. That becomes a vicious cycle, where you lose population, you lost jobs, and lose more population,” he said. “We don’t want to be like Detroit after the closures of auto plants. And we need ways in Hampton Roads to generate private-sector jobs. We need to work on industries such as renewable energy, unmanned drones, cybersecurity to generate higher-paying jobs for the region,” he said.
A shrinking labor force is also causing issues.
McNab says it’s decreasing because some are staying home out of fear of getting COVID-19, the lack of childcare options, and Baby Boomers retiring at a faster rate.
Unemployment benefits are not keeping people home, according to McNab, but the Great Resignation has shown that people are changing the ways they feel about work.
“Workers are still quitting their jobs at record rates. There’s a record number of job openings. Employers are complaining about being able to contain workers. This is simply an illustration of how the pandemic has changed workers’ expectations,” he said.
While Hampton Roads is seeing slower growth, McNab was surprised to see other areas like Winchester and Blacksburg recovering at a faster rate.
He says the commonwealth’s and Hampton Roads’ dependency on the federal government is something that needs to be discussed, especially with the threat of China and military readiness on the West Coast.
But overall, if Virginia needs to continue to be economically sound, it needs Hampton Roads to do so.
“How do we spark growth in Hampton Roads, which accounts for about 20% of economic activity in Virginia? If Hampton Roads is not generating jobs, Virginia is not going to realize its full economic potential,” he said.
To read the entire study, click here.