THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, January 18, 1996 TAG: 9601180405
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 63 lines
Hampered by the reluctance of many households to step up their spending, the Hampton Roads economy will grow more slowly this year than it did in 1995, a regional economist predicted Wednesday.
Falling interest rates probably will bolster home sales in the region during 1996, but retail sales will climb only 1 1/2 percent after adjusting for inflation, economist John W. Whaley told the Hampton Roads Planning District Commission.
Sluggish auto sales, along with increases in bankruptcy filings and unemployment claims, signal that the region's economy already has entered ``a modest slowdown,'' said Whaley, the commission's director of economic services.
However, the economic pain in the early 1990s from military downsizing might be over, he said.
``Beginning in 1990, the defense cuts really began to bite,'' he said. ``Beginning in 1994, we started adding jobs at a faster rate than the U.S.''
Whaley told the commission that growth in the Hampton Roads economy tends to closely follow the expansion of the U.S. economy, which is expected to grow a modest 2.1 percent this year.
In his forecast, Whaley predicted that Hampton Roads will add about 12,600 jobs this year, an increase of slightly more than 2 percent. However, the jobless rate for 1996 probably will climb to 5.1 percent from last year's 4.9 percent, he said.
``We think our labor force will grow a little faster than our ability to create new jobs,'' Whaley said.
Hampton Roads motels and hotels are likely to feel the effects of sluggish growth in household incomes elsewhere in the country, he said. With their budgets stretched, some families might decide to scale back vacations this year.
``Lodging receipts are the most discretionary part of household spending,'' he said.
In a separate report on the incomes of Hampton Roads residents, Whaley described a pattern of stagnant per-capita earnings and a widening disparity between the well-paid and poorly paid.
Whaley attributed the disparity partly to a decline in the number of higher-paying federal and military jobs and the recent proliferation of low-wage retailing jobs in the region.
The application of more advanced technology and the waning influence of labor unions also have contributed to the disparity in incomes, he said.
``In 1990, 54 percent of jobs were in sectors paying above-average wages,'' he said. By 1993, the percentage of Hampton Roads jobs in these better-paid sectors had slipped to 48 percent.
The same situation has been occurring throughout the country, despite substantial gains in business productivity, Whaley said. ``Labor hasn't been participating in the improvement in corporate earnings,'' he said.
When adjusted for inflation, per-capita income in Hampton Roads is below the national average, but the region's cost of living is at the national average.
That situation, Whaley said, has depressed the purchasing power of many Hampton Roads households. by CNB