Hampton Roads is gradually emerging from the devastating impact of the COVID-19 pandemic. The region's economy shows strong signs of improvement for the rest of 2021, and area residents could gather in person to hear the good news from Old Dominion University economists.
"Last year was an interesting year, which I'm sure many of us will never forget," Vinod Agarwal, director of ODU's Economic Forecasting Project, said Thursday at the Marriott City Center in Newport News. "It is good to be able to share news of our recovery in person for the first time since last March."
The optimistic mood in the room was tempered by Agarwal's remarks that significant challenges remain from the pandemic - including labor markets not fully recovered, inflation and an "unsustainable" level of federal deficit spending.
"Even through these challenges, we are forecasting a very good year for the U.S. and Virginia economies," Agarwal said.
ODU's Dragas Center for Economic Analysis and Policy forecasts real GDP growth of 4.8% in 2021, which would more than make up the region's 2.5% real GDP reduction in 2020. But, pointing to a significant lag from the pre-pandemic high in the number of jobs being filled, as well as a year over year increase in consumer prices of nearly 5% in May, Agarwal noted, "we still have a long way to go for a full recovery."
There are bright spots in the local and regional economy, the ODU economist said, starting with the largest pillar of the Hampton Roads economy - national defense. "If there is a pivot in national security strategy towards a 'Great Power' competition, Hampton Roads is well positioned given its role in building and maintaining ships, training personnel, and providing services to each of the military services," Agarwal said.
The local real estate industry adjusted rapidly to the disruption of COVID-19, and local real estate prices have climbed past their 2006 peak in every Hampton Roads community.
The Port of Virginia's share of tonnage shipped in and out of East Coast ports has risen sharply in the past two years, a payoff for investments the Port has made in its infrastructure, Agarwal said.
The local hotel industry, understandably devastated by the complete halt in travel in the early days of COVID-19, has recovered better than every one of the top 25 markets in the United States. The ODU economists forecast growth in hotel revenues of 43.6% in 2021. The Chesapeake and Virginia Beach markets are projected to climb past their pre-pandemic levels later this year.
And even the tight labor market, seen as a significant drag on the national economic recovery, has seen an unexpected beneficiary, Agarwal said: "Teenagers have never had it better when looking for summer jobs."
ODU's Dragas Center for Economic Analysis and Policy has for more than 20 years been an independent explainer and forecaster of economic data in Hampton Roads, the state and nationally. Researchers at the Dragas Center produce the influential State of the Region and State of the Commonwealth reports, which chronicle life in Hampton Roads and Virginia across a range of economic and quality-of-life factors.
For more information about the Midyear Economic Forecast, or other Dragas Center initiatives, see the Dragas Center Website.