Source: Bureau of Economic Analysis. (Click for more legible image.)
Is this what Virginia’s economic performance looks like in the “new normal?”
The Washington-Northern Virginia metropolitan region, long Virginia’s economic engine, has seen its economy sputter and slow. In 2012, the regional economy grew less than one percent, according to new data released by the Bureau of Economic Analysis. That’s what a $17 trillion national debt, trillion-dollar-a-year deficits and sequestration will do to you. Can all those really smart people in Northern Virginia reinvent an economy not so dependent upon federal spending? Let’s hope so.
Hampton Roads, the second largest metro region, has been plodding along with a sub-par growth rate for the last three years running. Meanwhile, after showing strong growth in previous years, the smaller metros — Charlottesville, Lynchburg, Winchester, Harrisonburg, Staunton, Blacksburg, Bristol — put in a dismal performance that flirted with recession. Indeed, according to BEA data, the GDP of Charlottesville and Harrisonburg actually shrunk. (For reasons unknown, Danville did not appear in the BEA list.)
The only sparks of light were Richmond and Roanoke; both grew faster than the national average. Unfortunately, there is no way of knowing whether the 2012 results were a lucky fluke or an indication of a longer-term vitality. In any case, the two regions are not large enough to pull the entire state out of its slump.
Here’s what we’re dealing with. Virginia’s number one economic driver, the federal government, is not growing. And it’s not going to grow for the foreseeable future. Northern Virginia and Hampton Roads have to reinvent themselves before they can start pulling the economy again. Of the two, Northern Virginia, with its vast IT industry, would seem to have the best chance, although it is possible that the Panama Canal widening might bolster Hampton Roads’ maritime sector.
The hot industries in the U.S. today are energy and farming. (Take a look at Texas and North Dakota to see what a strong energy sector can do for you.) Alas, Virginia is a net energy importer, and its one region of energy production, the coalfields of Southwest Virginia, are in a slump. Farming in Virginia is increasingly a boutique industry — wineries, horses and produce serving urban markets. It is not sharing the boom in the corn belt.
Virginia does have competitive strengths in manufacturing. Perhaps the emerging “re-shoring” trend will help. Otherwise, it’s hard to know where future economic growth will come from.
Update: Virginia’s median household income fell more than two percent last year, the worst drop in the country, reports the Washington Post today. By contrast, incomes plateaued in Maryland and increased in Washington, D.C. The District economy is more dependent upon federal spending than even Northern Virginia, so something other than federal spending cuts must be affecting incomes.
— JAB
Source: Bureau of Economic Analysis
