THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, January 22, 1996 TAG: 9601200180
SECTION: BUSINESS WEEKLY PAGE: 13 EDITION: FINAL
SERIES: Forecast 1996
SOURCE: BY HANK KURZ Jr. ASSOCIATED PRESS
LENGTH: Medium: 52 lines
Northern Virginia's role as the engine driving the state's economy won't change, even if the region is forced to rely less on federal government jobs and revenues, economists say.
A balanced federal budget and more cuts in defense spending would certainly hamper economic growth in the region, but the high-tech industries in the area have shown that they can adapt to change, said George Mason University public policy professor Stephen Fuller.
``The sky isn't falling,'' Fuller said. ``We have to be prepared for slower growth than we've seen in the past.''
Fuller said defense cuts forced defense firms to target non-government companies for work. The strategy worked, and many companies that have long relied on federal contracts are now diversified.
James L. Knapp, an economist at the University of Virginia, said the days of the state's economy - paced by Northern Virginia - outperforming the national economy are over, at least for the short-term. He said the state's outlook now is for a distinctly average, but healthy economy.
``Northern Virginia is still by far the healthiest subcomponent of the Washington area,'' he said, adding that the high-tech and communications industries already in place there provide the potential for more growth.
Because of its proximity to Washington and the well-educated labor force already in place, Northern Virginia's economy is likely to grow slower than in the past, Knapp said.
But, he said, even if the defense spending is greatly reduced and the fat contracts never return to the area, Knapp said, ``it's not that unusual for an area to have attained prominence in one area and move in other directions.''
A prime example is Pittsburgh, a city built by the steel industry but now flourishing with technology and service industries, Knapp said.
Fuller said even if the federal government does take jobs away from Northern Virginia, it often ends up putting them back into the mix by farming work out to private contractors.
Though final figures aren't in yet, the region was expected to gain 35,000 new jobs in 1995, 10,000 fewer than in 1994. But even under the worst circumstances, Fuller can't see the figure falling below an average of 20,000 news jobs per year between now and 2005.
``It's not going to decrease,'' Fuller said. ``It's just now going to grow as quickly as it has in the past.'' by CNB