Anemic economy may be new normal – and that may be OK

Stock photo of paper money to illustrate Anemic economy may be new normal

© Can Stock Photo Inc. / LumaxArt2D

“The economy is moving ahead, but at an uninspiring pace.”

Those words by National Federation of Independent Businesses Chief Economist Bill Dunkelberg and broadcast on the big screen summed up the messages from presenters at the Thomas Jefferson Institute‘s Business Leaders Roundtable on Virginia’s Economic Future at George Mason University on Monday.

Anemic economic growth holds true for the nation as a whole, but particularly in Northern Virginia. Despite the stilted improvement, it’s still improvement and the seven speakers did their best to put a positive spin on what all agreed is the new normal. Finding new normals in each economic sector to fit the overall new normal constituted the bulk of their presentations.

Northern Virginia is a company town and the company – the federal government – is not doing too well right now, Terry Clower, director of GMU’s Center for Regional Analysis, told the estimated 150 people in attendance. That accounts for much of Virginia’s flimsy post-recession growth compared with the rest of the country. If Northern Virginia does not diversify its economy, conditions will worsen.

“Our future looks pretty bright if we can change our contractors from B2G to B2B (Business-to-Government to Business-to-Business),” Clower said.

Brett Vassey, president of the Virginia Manufacturers Association, noted that Virginia ranks 49 out of the 50 states in job growth. Much of the manufacturing industry in Northern Virginia is defense manufacturing, and between federal budget cuts and sequestration that sector has been severely impacted.

“We need to find a new normal,” he said.

Tech jobs are equally impacted, said Josh Levi, vice president for policy for the Northern Virginia Technology Council. Virginia is shedding tech jobs as 38 of our sister states increase tech employment through incentive programs. In fact, Levi said, Virginia is dead last in tech job creation, having lost 3.1 percent of its tech jobs in 2013-2014.

Despite those losses, in 2014 Virginia still ranked:

  • First in concentration of IT jobs in non-IT industries
  • Second in concentration of high-tech employees
  • Second in concentration of scientists and engineers

IT also is diversified in Northern Virginia, as is manufacturing despite its overdependence on defense contracting. While Virginia earned mostly C’s and D’s in the 2015 Manufacturing & Logistics Report Card, the state earned an A in Sector Diversity and a B in Productivity and Innovation, Vassey noted. Equally important is Virginia’s educational rankings in science and math. Of 16 Southern states surveyed, Virginia ranked first in eighth-grade science proficiency and tied for first with Maryland and Texas in eighth-grade math proficiency.

Stephan Cassaday, president and CEO of Cassaday and Company, was perhaps the most upbeat of the presenters. Two and a half percent growth may well be the new normal, he said, but if it’s steady growth that’s better than a 3 or 4 percent growth rate followed by a 3 or 4 percent drop.

The other presenters and their presentations:

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One response to this post.

  1. Posted by Hal Reniger on June 28, 2015 at 10:21 am

    the new normal is scary – and will continue until, I believe, until the U-6 unemployment stats work themselves out. The creation of middle class private sector jobs is the only way, other than waiting for the Boomers to die off – and that will take decades.

    Hope all is well —

    Hal Reniger

    Like

    Reply

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