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ODU economists release Q3 forecast

Updated: August 22, 2013 - 2:09 pm

Posted: August 22, 2013

By Jared Council

Sequestration hasn’t been as bad as it was expected to be.

That’s according to economists with Old Dominion University’s economic forecasting team, who in March projected those federal cuts to prompt a net of 12,000 job losses this year. In a new forecast report released Thursday, they said the region should gain a net of roughly 1,200 jobs in 2013.

“We basically dodged a bullet,” ODU economist Vinod Agarwal said. In the report, Agarwal said the area benefited from Congress and the executive branch reducing the impact of sequestration on defense spending and granting many federal agencies flexibility to prioritize cuts.

The report, which is a forecast for the third quarter, was mostly positive. Retail sales are expected to increase to $5.2 billion from July through September, a 1.9 percent jump from the same period last year. Hotel room revenues in the quarter should climb 1 percent from the year-ago period to $250.8 million, and cargo at Virginia’s port is expected to increase 1.4 percent to 4.48 million tons.

Single-family housing activity was a bright spot in the report as economists noted that housing permits issued for one-unit homes during the half of 2013 increased by 25.7 percent compared to first half in 2012. The value of these permits increased by 34.9 percent. For the third quarter, economists predict the value of the permits will increase 18.4 percent over the year-ago period to $227.1 million.

Not everything in the report was rosy. Although year-over-year hotel revenues are expected to climb in the third quarter, revenues over the first half of 2013 are down 2.7 percent compared to the same period last year. Agarwal said decreases in travel by federal employees – especially military personnel and defense contractors – played a role.

“An anticipated recovery in the national and tourist market areas’ economy should lead to an increase in hotel revenue for the third quarter,” the report said. “However, sequestration and continuing reduction in travel by federal government employees will continue to have a negative impact on this industry.”