THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, July 2, 1994 TAG: 9407020541
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY PHIL MURRAY, STAFF WRITER
LENGTH: Short : 44 lines
The Hampton Roads economy could suffer later this year if higher interest rates slow the activity of the rate-sensitive construction industry, a regional economist said Friday.
To a large extent, the local economy has been dragged forward over the past year on the coattails of a rebound in commercial and residential construction. That activity, along with a pickup in service industry jobs, has helped to offset the loss of thousands of jobs at area shipyards to defense cutbacks.
But David G. Garraty, a professor of economics and management at Virginia Wesleyan College, said it appears likely at this point that the Federal Reserve will tighten credit further, which could put a crimp in local home-buying and commercial building.
``Construction is keeping us going, but it makes me nervous,'' Garraty said.
An index compiled by Garraty that measures economic activity in Hampton Roads took a slight dip in May, but strength in the construction and real estate industries helped keep the index near post-recession highs.
The index declined at a 3 percent annual rate, but it still is 1.4 percent above its level from a year ago. Garraty uses seasonally adjusted employment numbers and average industry earnings to measure local economic performance.
Garraty said he expects the index to resume its rise this summer when activity from the tourist season kicks in. Beyond that, the specter of higher interest rates makes it more difficult to predict, he said. ILLUSTRATION: Area economic index/D2
HAMPTON ROADS ECONOMIC INDEX
Staff Chart
Economic activity in Hampton Roads slowed in May, but the trend is
expected to turn upward in the summer.
SOURCE: David G. Garraty, Virginia Wesleyan College
KEYWORDS: ECONOMY by CNB