Goes. Economic growth will slow in 2022, predict ODU economists

Center Dragas 2022 Annual Economic Forecast predicts slower GDP and job growth


January 26, 2022


Catherine Schulte

Vinod Agarwal. Photo by Mark Rhodes

Virginia’s economy is expected to grow at a slightly slower pace in 2022 than it did last year as the COVID-19 pandemic continues to make future forecasts murky, according to the 2022 Annual Economic Forecast released. Wednesday by the Dragas Center for Economic Analysis at Old Dominion University. and Politics.

“If we can control COVID-19, the economy will do pretty well. But as we’ve seen over the past two years, it’s a big if,” Vinod Agarwal, deputy director of the Dragas Center and director of ODU’s economic forecasting project, said in a statement.

The United States recorded real GDP growth of 5.2% last year after a decline of 3.7% in 2020. In 2022, the country’s GDP is expected to increase by 3%, and real GDP growth Virginia is also expected to be 3%, following growth of 3.8% in 2021.

Supply chain constraints are expected to ease in the second half of 2022 but will continue into 2023, Dragas Center Director Robert McNab said in the forecast presentation. “We see suppliers adapting [and] we are seeing goods moving through ports at a faster rate, suggesting producers will learn and supply chain constraints will ease but not be entirely eliminated this year,” McNab said.

Civilian employment growth in the United States is expected to be 2.4%, down slightly from 2.7% in 2021, while the unemployment rate is expected to fall from 5.4% to 4%. For Virginia, civilian job growth is expected to be 2.2%, also slightly lower than the 2.5% recorded by the Commonwealth in 2021.

For 2023, the report projects that Virginia’s GDP will reach 2.8% of GDP, but civilian employment growth will slow to 1.5%.

McNab predicts labor shortages will persist as the Great Quit continues and baby boomers continue to leave the workforce, with international migration potentially unable to keep up with industry demand.

On the good news side, the inflation rate in the United States is expected to be 3.8%, up from 4.7% in 2021. The Federal Reserve is expected to start raising interest rates in a bid to combat the inflation, potentially as early as March.

Political and global uncertainty persists, including potential disruptions like a Russian invasion of Ukraine, but “even with all of that, I would say the United States is poised for growth in 2022 and into next year,” McNab said.

For Hampton Roads, Agarwal expects economic growth in the region – measured by GDP – to be weaker this year than it was in 2021. The Dragas Center projects real GDP growth of 2. 4% in 2022 in the region, after a rate of 3% in 2021. . The ODU projects civilian employment growth of 2.1% for the region, while the regional unemployment rate will likely be around 3.3%.

Defense spending will boost the Hampton Roads economy. The Dragas Center projects the Department of Defense will spend $25.3 billion on Hampton Roads in 2022, an increase from the $24.5 billion spent in 2021.

The Port of Virginia is also expected to contribute, with record freight shipments expected this year. In 2021, the Port exceeded 3 million TEUs (20-foot container equivalent) for the first time.

ODU further estimates that hotel revenues in the region will increase by 6.4% this year.

Although mortgage rates are expected to rise by about one percentage point, Agarwal predicts single-family home prices will continue to rise. The median sale price for the region increased by 9.4% from 2020 to 2021, from $255,000 to $279,000.

Housing supply has tended to decline as demand increases during the pandemic. In 2020 and 2021, the average days on market for real estate listings in Hampton Roads increased from 41 to 24. The number of existing residential homes sold increased from 29,895 in 2020 to 34,703 in 2021.

For 2022, there is only 0.8 months of existing housing supply in the region, a sharp drop from 2020, when there was enough regional supply of existing housing for 2.31 months . Towards the end of 2010, supply was estimated at 10.52 months.

In response to a question about the effect of offshore wind on the regional economy, McNab said it would depend on Hampton Roads’ ability to leverage its comparative advantages in advanced manufacturing, data analytics and shipbuilding to attract manufacturing. “What you want to do is look for those opportunities where you can manufacture and export,” he said, so that the region becomes a net exporter rather than an importer of renewable energy goods.

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