
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, March 8, 1990                   TAG: 9003081476
SECTION: BUSINESS                    PAGE: C6   EDITION: METRO  
SOURCE: Associated Press
DATELINE: RICHMOND                                LENGTH: Medium

INCOME-SPENDING GAP WIDENS

The gap in Virginia's personal income growth and retail sales increase reached its greatest point in eight years during 1989, says an economist who adds that Virginians were exceptionally relucant to spend money last year.

"A gap of that size has not occurred in Virginia since 1981, the year the last recession began," said Roy L. Pearson, director of the Bureau of Business Research at the College of William and Mary in Williamsburg.

Pearson said personal income for Virginians went up 9.2 percent last year, more than twice the 4.5 percent growth rate of retail sales.

He expected retail sales to improve, however, and estimated a growth rate this year of 6.2 percent. January sales were up 13.6 percent from January 1989, he said, although the month was bad for automobile dealers and home builders.

Pearson said new car registrations dropped 13.4 percent in January compared with the same month in 1989. Building permits fell 14.1 percent.

"After a calendar year 1989 decline of 9.1 percent for new car registrations in Virginia, the new year began with a continuing slump in car sales," Pearson said.

The January figures on building permits also extends last year's slump of 7.7 percent, he said.

"We expect building permits to continue to fall in most parts of the state in the coming months," Pearson said.

Most employers in Virginia expect no changes in their level of hiring during the second quarter of 1990, according to a report by Manpower Inc.

The survey by the temporary employment firm found:

In Richmond, 50 percent of employers expected no change in hiring, 20 percent reported plans to hire workers next quarter and 20 percent said they would lay off workers. Ten percent were unsure of plans.

In Newport News, 17 percent will hire, 20 percent plan cutbacks and 63 percent foresee no change.

In Norfolk-Virginia Beach, 10 percent will hire, 13 percent plan cutbacks and 74 percent see no change, with 3 percent unsure.

In Lynchburg, 30 percent will hire, 3 percent plan cutbacks, 57 percent see no change and 10 percent were unsure of plans.

In Northern Virginia, 17 percent will hire, 59 percent expect no change and 24 percent predict layoffs.

by CNB