THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, October 26, 1995 TAG: 9510260452
SECTION: BUSINESS PAGE: D6 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Short : 43 lines
Feeling the effects of the Federal Reserve's interest-rate hikes, the Hampton Roads economy remained stagnant in August, according to a local economic indicator.
The Hampton Roads Economic Performance Index showed no change in August from July's reading of 104.9. The index is based on seasonally adjusted data on jobs and average wages from 1991-93.
``The economy appears to be continuing its flat performance,'' said David Garraty, a business professor and economist who administers the index at Virginia Wesleyan College. ``Clearly, growth in economic activity in Hampton Roads is at a standstill.
``The point of engineering a `soft landing' is to slow the rate of growth but not to eliminate growth,'' Garraty said. ``Yet with the economic weakness Hampton Roads has experienced primarily due to defense downsizing, it would appear that is what has happened locally.''
``Soft landing'' describes a slowing of economic growth that results from raising interest rates.
Virginia's economy also has stalled in the past seven months. The Virginia Economic Performance Index read 107.1 in August, down from July's revised 107.3.
The loss of government jobs remains a source of weakness for the state and the region, Garraty said. In August, federal employment in Virginia was 3,700 below the August 1994 level. Most of the job losses were in Hampton Roads, where the figures dropped by 3,000 from August 1994. Federal jobs in the region, however, make up only 27 percent of the state's total.
Garraty expects the local economy to lag behind the U.S. economy due to continued budgetary pressures on federal employment and a weakness in shipbuilding. by CNB