Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 10, 1991 TAG: 9103090146
SECTION: BUSINESS PAGE: B-2 EDITION: METRO
SOURCE: By KAREN HAYWOOD/ ASSOCIATED PRESS
DATELINE: WILLIAMSBURG LENGTH: Medium
Pearson, 51, is director of the Bureau of Business Research and a professor of business administration at the College of William and Mary. Every month, the bureau publishes two four-page studies - the Virginia Business Report and the Williamsburg Business Index - analyzing the previous month's business trends and forecasting tomorrow's business climate.
Pearson and a staff of four compile the reports based on federal data and surveys of businesses and governments.
For example, the January report shows Virginia's recession began in the third quarter of 1990 and that income did not keep pace with inflation. Building permits plunged, new car sales continued to slide, and retail sales did not keep up with inflation either.
The bureau was created in the late 1950s. Pearson took over in 1984. "The thing I added to it has been the forecasting," Pearson said.
Subscribers to his monthly reports include nearly all of Virginia's municipal governments and a variety of small businesses from Wyatt Brothers to Gerson Furniture in Richmond and Martha's Vineyard and Tea Shop in Roanoke. Nearly all the state's shopping malls ask for his data and analysis and Pearson is frequently quoted by the business news press.
His forecasting has "been very accurate on retail sales, personal income," Pearson said. "The employment figures are hard to predict."
Across the state, the employment figures tend to even out, but "you can take some big hits in a local area" if one business closes or lays off a lot of people, he said.
Predicting what is going to happen, such as a recession, is easier than predicting when it will happen and to what extent, Pearson said.
"We knew Northern Virginia was overbuilt," he said. "We knew new construction had to turn down. We didn't predict it would stop" as it did.
When making a financial forecast, Pearson also looks at what "factors are continuing in an unsustainable way." For example in the 1980s, consumer spending outpaced income. But eventually, he said, people have to pay off their debts and stop buying.
That means a broad, 10-year forecast often is easier to make that a six-month prediction, he said. In the short run, the key is demand, which is subject to outside factors such as the war in the Persian Gulf. In the long run, supply - of workers for one thing - is the key.
Because population growth has slowed, Virginia's economy will grow more slowly, he said.
In the mid-1980s, Virginia's job growth was 5 percent and Northern Virginia's was 10 percent. The demand was such that people moved to Virginia from other states to work, he said.
That's not the case now, as Pearson told an Atlanta reporter looking for places where people from Georgia could find work. "Our own people have trouble finding jobs," he said.
Although the four-page Virginia Business Reports are the bureau's most visible product, it is a small part of what the staff does, Pearson said. The bureau also produces special studies including an analysis of the economic and tax impacts of state and federal medical assistance payments in Virginia.
Indeed, while the brief format of the monthly newsletter is popular, Pearson said leftover information isn't wasted. Pearson uses it to produce the special studies and to respond to the many questions he gets from politicians, businessmen and reporters.
Pearson didn't start out interested in economics. "I went to college to major in physics," he said. But "I decided I didn't like the hard sciences."
He switched to business, took lots of economics, then obtained his doctorate in economics.
"I originally thought I might use it in business, might end up on Wall Street as an economic adviser," he said. "But I was always interested in applied economics, how economics can be used to solve business problems."
In college at the University of Virginia, he worked on reports similar to those he does at William and Mary.
He has been at William and Mary since 1971, after teaching at the University of Arkansas and helping to start a business school at Centenary College of Louisiana.
by CNB