Old Dominion University's Robert M. McNab began the 2021 State of the Region address by expressing his gratitude for not delivering the presentation through a "tiny black box."

The COVID-19 pandemic affected life in Hampton Roads in myriad ways, including the suspension of almost all nonessential public gatherings, such as the State of the Region luncheon. As he began this year's presentation to a sellout of 500 community and business leaders Tuesday at the Norfolk Marriott Waterside, McNabb said, "This is a tiny symbol of our return to normalcy in the region."

The 2021 report does not suggest the COVID-19 pandemic, which has had an unprecedented impact on economic and social lives worldwide, is about to conclude. But in showing data that illustrate a clear benefit to vaccinations in reducing coronavirus infections, McNab, director of ODU's Dragas Center for Economic Analysis and Policy, suggested there is a way for the region to fully recover. "Our path forward through the pandemic is through vaccinations," he said.

Data presented by McNab and Vinod Agarwal, director of ODU's Economic Forecasting Project, show that unsurprisingly, Hampton Roads was clobbered economically by COVID-19. A painstaking, decade-long recovery of jobs lost during the Great Recession of 2007-09 was wiped out in six weeks, and the region is still 40,000 jobs short of its pre-pandemic high. This is not merely because the jobs are not present.

"The larger problem is getting people back into the labor force at all," McNab said. Because of COVID-related health concerns or lifestyle changes brought about by an 18-month pause in normal work operations, many individuals are opting not to return to the labor market.

"As a result, employers looking for job candidates are competing for a smaller and smaller pool of workers," McNab said.

There are bright spots in the recovery. Agarwal, who discussed the Port of Virginia, the incredibly resilient housing market and tourism in the region, said that the Hampton Roads hotel market has done better than all top 25 markets in the United States so far in 2021. Of course, given the importance of tourism as one of the three "pillars" of the local economy - along with defense and the Port of Virginia - hotels had significant economic ground to make up.

"It should come as no surprise to anyone that the industry most affected by the pandemic was hospitality," Agarwal said.

Spending on defense, by far the largest driver of the Hampton Roads economy, is projected to rise in the next two or three budget cycles. But McNab cautioned, as he does every year, that Hampton Roads is playing with fire by relying on direct federal spending to such a significant degree.

Deficits have risen to GDP-percentage levels not seen since World War II, "with no plan to curtail spending." And the partisan combat in Washington raises the specter of sudden spending drops caused by political gridlock. "If Congress sneezes, we end up in hospital here," McNab said. "We are so tied to the federal government's discretionary spending."

The 22nd annual State of the Region report also includes chapters on the Apprentice School at Newport News Shipyard, legalized gambling in Hampton Roads, the decline of local journalism, cash bail in Hampton Roads and Old Dominion's potential role as a model for 21st-century universities because of its commitment to social mobility.

For two decades, Old Dominion University's Dragas Center for Economic Analysis & Policy has produced the State of the Region Report as a service to decision-makers and thought leaders in Hampton Roads, inserting data into discussions that affect our daily lives. This year's State of the Region Report is available ONLINE, along with every other report produced by the Dragas Center.

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