THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Thursday, July 21, 1994 TAG: 9407210459
SECTION: BUSINESS PAGE: D01 EDITION: FINAL
SOURCE: BY PHIL MURRAY, STAFF WRITER
LENGTH: Medium: 65 lines
Rising interest rates could slow Hampton Roads' economic growth in the second half of 1994 and next year by cutting into consumers' appetite for new cars and homes, a regional economist said Wednesday.
The local economy has shown surprising strength in the first six months of the year - thanks in large part to surging home, auto and other retail sales, said economist John W. Whaley.
Despite layoffs at area shipyards and concerns about future defense cuts, local consumers have splurged this year: Auto sales are up 21 percent over 1993; home sales are up 11 percent.
All of that buying on credit has helped keep jobs growing at a respectable 1.5 percent here this year, slightly higher than last year.
But the party may soon be ending. Higher interest rates make big-ticket items like cars and homes more expensive.
``We seem to be on a roll right now; we have some momentum,'' said Whaley, director of economic services for the Hampton Roads Planning District Commission. ``But I expect marginally slower growth in the second half. By comparison with a very strong first half, it won't be quite as good.''
AS PART OF HIS ANNUAL REPORT on the local economy, Whaley on Wednesday also released a new analysis showing that the fastest-growing sectors of the local economy are those with some of the lowest-paying jobs.
That mirrors a national trend toward a more service-based economy. But Hampton Roads has been losing ground to national averages in recent years in terms of its per-capita income.
That, Whaley said, means we can expect more doses of a slow-growth economy in the near term.
``If we were creating jobs on the higher end, it would tend to be stimulative,'' he said.
OTHER HIGHLIGHTS of Whaley's report included an analysis of defense cuts in Hampton Roads showing that we are suffering more than our share from procurement reductions, but benefiting from consolidation of personnel here.
Defense outlays have fallen 17 percent nationwide since 1987, but spending locally is down 32 percent, Whaley said.
Meanwhile, the number of military personnel stationed in Hampton Roads grew to 133,000 in 1992, the highest level since 1969, according to the latest data from the U.S. Bureau of Economic Analysis. At the same time, the Pentagon has reduced troop levels by about 250,000 nationwide.
Whaley, however, said he was a little skeptical of the bureau's data. And those 1992 numbers may be outdated. The Navy says its personnel here dropped from 108,050 in 1992 to 100,554 in 1993.
Even so, the continued high levels of uniformed people in Hampton Roads has helped sustain the local economy during the defense build-down, Whaley said. ILLUSTRATION: Staff color graphic by JOHN CASERTA
ECONOMIC UPDATE: HAMPTON ROADS
[Includes Economic Indicators and Job Growth Information]
Source: Hampton Roads Planning District Commission
For copy of graphic, see microfilm
KEYWORDS: HAMPTON ROADS ECONOMY
by CNB