NORFOLK, Va. - Hampton Roads can avoid a recession in 2023 thanks to defense spending, but local economists say it's all dependent on Congress sorting out the debt ceiling.
"The good news here in Hampton Roads - we should see more jobs. We should see stronger economic growth than the Commonwealth and the nation," said Dr. Robert McNab, an economist at Old Dominion University. "It's all conditioned on how people behave in Washington."
McNab and his colleague Dr. Vinod Agarwal presented their 2023 economic forecast at Old Dominion University on Wednesday afternoon.
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The two predict a mild recession nationwide in the second half of the year, but say Hampton Roads won't face one as defense spending represents about 40 to 45-percent of the local economy.
"We expect Department of Defense Spending to increase again this year," said Agarwal. "With this increase, I'm forecasting for this area the Hampton Roads economy will not have a recession this year unless we have issues with Washington, D.C. like a debt ceiling crisis."
Last week, Congress reached its borrowing limit, but the Dept. of Treasury has taken steps to prevent the U.S. from defaulting on its debt through June.
Locally, Agarwal says the hotel industry has more than recovered from the pandemic and says the Port of Virginia continues to grow. The housing market has slowed due to interest rates increasing, Agarwal said.
Tourism is also expected to have a solid year locally. "Tourism should do quite well thanks to one event called Something in the Water," said Agarwal.
On the national front, McNab said inflation appears to be slowing down significantly, although certain issues are still possible like the rising prices of eggs. "On average, prices are going to return much more were they were prior to COVID-19, but we're still going to have spot shortages throughout 2023 and into 2024," he said.
All-in-all the two are optimistic for this year. "We want to challenge conventional wisdom because everyone is looking at the economy now and thinking is going to be very high or that Hampton Roads is going to continue to underperform the national economy," said McNab.
