Has Virginia’s Economy Turned the Corner?

employment_growthGood news on the Virginia employment front. After two years of sequestration-related stagnation, employment in Virginia grew faster than the national rate year-to-year through February 2016 — 2.5% compared to 1.9% — according to figures released by the Virginia Employment Commission. Growth was strongest in the Winchester and Richmond MSAs but it was solid where it counts the most, Northern Virginia, the state’s largest metro. Hampton Roads and Lynchburg continue to lag the state and national economies.

As a resident of the Richmond region, I am particularly heartened by the Richmond numbers. Northern Virginia and Hampton Roads had an excuse for their lagging performance in recent years — their military-dependent economies were hammered by sequestration-related budget cuts. Richmond had no such excuse; federal spending is modest here. As memory serves, this past year is the first in the current business cycle that Richmond has significantly outperformed the national economy.

Not only do the overall employment numbers look good, the strongest growth in the Richmond region took place in the professional and business services sector, a highly compensated occupational category. Growth was up 9.6% of the period, the Richmond Times-Dispatch quotes economist Chris Chmura as saying. State government employment, down 0.4%, was not a factor.

Since getting hammered during the recession, Richmond has been reinventing itself. Dramatic change has taken place not reflected by the overall employment numbers. The economy is less dependent today upon a handful of large employers like Infineon, Circuit City and LandAmerica, all of which disappeared in the recession. A new generation of entrepreneurs is rising to the fore. The region is more vibrant than it has ever been in the 30 years I have lived here.

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14 responses to “Has Virginia’s Economy Turned the Corner?

  1. I track this pretty closely. Much of the gains were not noticed until after the BLS did their annual benchmarking survey. As of January, Professional and Business service employment was flat. After the revisions from the benchmarking we had an increase of +10K. We didn’t have many large announcements so I assume it is mostly organic growth.

  2. Commercial office vacancies in Fairfax County account for over 20 million sq. ft. vacant out of 116.5 million sq. ft. of capacity. As of mid-year 2015, direct office vacancy rate was 16.5%, highest since 1991, when it was 16.8%. It’s ugly.

    This information is taken from the County’s FY17 budget documents.

  3. sounds like office space in NoVa is overbuilt or over-priced or both.

    but got me to wondering if that might be a useful metric to compare metro areas – perhaps square feet of office space per capita or some such.

    it’s hard for RoVa to be shedding tears for NoVa on economic issues though.

  4. I agree that Richmond is doing well. I know that anecdotes have lost all value in our age, but I swear, you can feel the economic growth in Richmond every time you visit.

  5. Article in WaPo this morning detailing the woes of an older and less affluent Fairfax county that’s now having to forgo pedestrian park bridges and planetariums at the schools…big office building vacancies .. all kinds of financial carnage …

    all because of the sequester!!!

    Now here is a REAL quandary – in order to NOT INCREASE taxes on the poor folks in RoVa – it’s put a real hardship on NoVa.

    BOO HOO!!!!

  6. The good news here is Winchester, and Richmond. Here is where I would bet my money on the future. I would also include Roanoke, and bet big on eastern Loudon County’s future. These places will eat Fairfax’s lunch if they play their cards right.

    One thing Steve Case gets right and is doing big things for, is spreading funding opportunities around into second tier cities or towns. It is time for these places to catch the next big growth wave. This is waiting to happen if our corrupt political system does not kill it, which it is doing now, and may well succeed in killing for the foreseeable future, absent change.

    But save for the threat the Federal government now poses, the winners will be those 2nd tier cities and towns who play their cards right, because once the wave breaks loose, the competition will be fierce. Here brains, smarts, know how, and deft marketing will make all the difference. Traffic gridlock in places like Fairfax, and failure to resolve it the right way, will drive this growth out to the second tier towns and cities that get their act together to attract that growth. And failure on their part to be nimble and quick and highly adaptable will be category killers.

    Locals who build hip scenes and also family and community scenes will be key to success. The Federal government using today’s crony capitalism and one size fits all driven by long distance dictates and today’s gross political corruption to spread public monies around to buy votes and trade political favors like is happening now will be category killers locally yet paradoxically drive growth elsewhere, until it throttles the entire nations economy as it does right now.

    • Fairfax County does not really get it. As Tony Olivio’s article in the Post explains, its BoS, School Board & related staffs continue to cling to the past, where money flowed from Uncle Sam and Fairfax County could be all things to all people. Couple that with decades of development that exhausted the transportation system; an outflow of people with money (often retired); and a large inflow of relatively unskilled workers, who pay much less in taxes than they generate need for services, and we have a county closing in on a tipping point.

      Among others, the County needs to: 1) implement the results of its line of business study (cut ineffective programs); 2) force the Economic Development Agency to meet higher goals or change the team; 3) stop the foolishness of trying to develop many “activity centers” and concentrate on making Tysons, Reston and maybe a few other areas very successful; 4) end the sweetheart treatment of development versus nearby localities; 5) enforce the state laws on school residency (a parent or guardian must live in the county) and the occupancy code (one poor family per house rather than four); 6) pressure the Schools to do their own lines of business review; 7) diversify the tax base by implementing those taxes that are already permitted; 8) have the legislative delegation kill bills from other parts of the state until counties receive the same taxing authority as cities and towns; 9) eliminate, on a going forward basis, the extra pension for teachers that encourages them to retire in their 50s; 10) on a going forward basis, bring county pensions in line with VRS; 11) reduce employee health care coverage to equal that of the federal government; and 12) do the opposite of anything recommended in a WaPo editorial.

      And one more-file suit against the Commonwealth challenging the LCI formula for failing to address the higher costs in NoVA and the vast number of low-income students. A suburban school district in Indiana successfully challenged that state’s funding and proved the formula discriminated against growing suburban districts. The legislature then caved and adjusted the formula. You good people of RoVA must start paying higher real estate taxes.

    • 2/ force the Economic Development Agency to meet higher goals or change the team:”

      I could not agree more. The Fairfax Economic Development Agency has not had an new or original thought since the mid-1980s. Their grandiose claims spun out daily through the horn of a broken Victrola have been dying now for more than 40 years. Fairfax County, it’s a sad caricature of its own sad myths. A place trapped in its failed past, it has no present awareness of itself and what’s happening around it, as it dies.

      Fairfax County has been in total denial, a kind of suspended animation akin to a vegetative state for several generations now. This is a one trick pony last neutered by the high tech bubble bust of 2000+ as it now keeps jumping through a hoop dangling barely in a circus tent long since empty.

      Even the county’s official website history is stale and woefully tasteless. Time and history has stopped dead in Fairfax county. Fairfax County is America’s Rip – Van – Winkle. Given up as hopelessly isolated, a bridge too far, even by the intrepid Chesapeake explorer Captain John Smith in 1608, Fairfax County then slept on for another 150 years until kicked awake briefly by George Washington and General Braddock in the French and Indian wars.

      After the death of George Washington and his Patowmac Canal, Fairfax slipped back into slumber again for yet another 155 years because still no one could get to Fairfax, and no wanted to change it anyway.

      Finally Dulles Airport and Capital Beltway were built, kicking Fairfax County awake briefly again, only to have the county kill its two lifelines and choke itself to death on its own greed and theft, gorging itself into a White Elephant chained to pole drowning in its own waste. And therein in now drowns slowly amid gridlocked traffic from horizon to horizon, shutting down a whole region now, jamming up travel from Maine to Key West.

  7. I am a little perplexed by the Lynchburg numbers. According to the latest 2015 Census estimates, Lynchburg was the third fastest growing Virginia city over 40,000 in population adding 1,200 people in a single year (1.5% growth). Now a lot of that growth is the growth of Liberty and other area colleges (maybe upwards of half), but there is still a high number of young professionals moving here for work. I live downtown and the downtown population has increased three fold downtown since I moved to Lynchburg 4.5 years ago and there are projects going on everywhere right now (about $130 million in investment going on downtown). The number of new businesses opening up here is at the highest level since when I moved here, though they tend to be smaller businesses and in the service sector…

    • Encouraging news about downtown Lynchburg.

      I wonder about the numbers, too. As you point out, they don’t always seem consistent with the anecdotal information. For serious analysis, it’s probably best to rely upon a basket of indicators, not just one or two metrics like employment or income.

      • Very good points Jim. Lynchburg is also uniquely different from other Virginia MSA’s (and most around the US as well) in that the core city makes up the lion’s share of population and economic growth (around 2/3 of population growth in the Lynchburg MSA has been in the city since 2000). It could also be a case of higher growth in the city and stagnant growth in the surrounding localities. If you are interested in the revitalization of downtown and the projects going on, here is an interactive map of downtown projects I developed:

        https://www.google.com/maps/d/viewer?mid=zNzRFEH1zBJc.kp9ZCr_fTePI

        and here is a community thread I have been maintaining and posting to since 2013 on Lynchburg development with a focus on downtown (there are three pages to date with the first post being the oldest):

        http://www.skyscrapercity.com/showthread.php?t=1635205

      • Just a slight error that the previous comment should say 2/3 of population growth since 2010 and not since 2000. Thanks!

        • dbcook1,

          Thanks for the interesting thread and map.

          We have friends in Lynchburg, and I agree that the city’s growth has been great in the past 5 years.

          I don’t know how you feel, but I have posited the following on this site:

          If Virginia really cared about economic growth in Southside Virginia, they would have placed a lot of that Tobacco Commission money that went to Danville/Martinsville/South Boston and put it into Lynchburg’s development. Allow Lynchburg to become the “hub” of Southside Virginia….

          Instead, the General Assembly will probably continue to put $$$ into Danville/Martinsville/South Boston/South Hill and see almost zero return on its investments.

          • Cville Resident, I have mixed feelings about the Tobacco Commission funding strategy. I get the whole mentality that we need to invest in Virginia’s Southside which has been struggling for decades, but the entire region may be beyond saving without some serious public and private sector investment to recreate the whole region. I think the money would have been better used if it had been invested by the state into medical care, medicaid, VRS, or something else to benefit the state as a whole. I think the way it has been handled is borderline scandalous.

            A lot of money from the Tobacco Commission has vanished and a lot of projects that were started through the fund have not been realized. Maybe things will improve with Feinman coming on board and McAuliffe putting the pressure on to reform the whole commission.

            Around $20 million of the money did go to supporting growth in Lynchburg with the creation of the the medical school just across the city border in Campbell County overlooking the main campus. it was kind of shady how the whole thing played out, but a positive is that it has brought in new growth for LU and regardless of how you feel bout the institution, growth at LU means positive growth for Lynchburg as a whole… to a degree.

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