by Greg Grootendorst, Chief Economist and Katherine Rainone, Regional Economist
When the COVID-19 pandemic hit the United States in early 2020, so much of how Americans lived their daily lives changed very quickly in order to stay safe and healthy. As movie theaters, restaurants, bars, and other indoor activities began closing, outdoor recreation emerged as a safe way to get out of the house. While some national, state, and local parks were closed, one result of business closures and stay-at-home orders was a surge in park visitation for those parks that remained open.
Quality of life is an important economic theme to track, and access to green space and quality outdoor recreation is a big factor to many people looking to move to a new region, and an incentive to stay where they currently live. Experts say that spending time outdoors is critical for health and wellness, and all the more necessary during a public health emergency. Hampton Roads has abundant outdoor resources, in addition to local parks, our region has seven state parks within its bounds: Belle Isle, Chippokes, False Cape, First Landing, Kiptopeke, York River, and brand-new Machicomoco.
According to data from the Virginia Department of Conservation and Recreation (DCR), total 2020 visitors to state parks in Hampton Roads were up by nearly 20% when compared to 2019. As shown in Figure 1, nine out of the twelve months of 2020 showed a higher number of visitors to state parks in the region than the same month in 2019. While 2021 data is only available through the end of May, the first five months of 2021 show a 5% increase in total visitors over the first five months of 2020, and 19% over the first five months of 2019 (these numbers exclude visits to Machicomoco because it opened in April, including those visitors would show an even larger 2021 increase in total visitors).
Figure 1: Monthly visits to Hampton Roads state parks, 2019—2021 (excludes Machicomoco). Source: Virginia Department of Conservation and Recreation, HRPDC.
While the data for this article used state parks in the Hampton Roads region, there are a plethora of local parks that likely experienced similar increased traffic during the height of the pandemic, and understanding how those parks are used is also important to the health of the Hampton Roads economy. Due to the smaller local nature of these parks, it’s difficult to track monthly visitors in the same way DCR tracks visits to state parks, but in a 2020 survey of 130 U.S. city mayors about resident behavior post-COVID, 76% believed that residents in their city are more likely to visit parks and greenspaces than pre-COVID.
During a pandemic when many camping areas were closed and programs and events canceled, revenues were impacted. In July of 2020, Virginia State Parks faced a budget cut due to loss of tax revenue brought on by the onset of the pandemic, and a recent report released by the Trust for Public Land states that 63 park agencies in the 100 largest U.S. cities reported budget cuts due to COVID-19. If the expectations of local leadership hold and new park visitors are here to stay, investments in parks and open spaces will become critical as a foundation for healthy, inviting, and inclusive localities and regions. For those investments to happen, revenue and budget allocation are needed.
Given the DCR state parks visitor data is currently only available through May 2021, the question remains: did the pandemic convert nature-lovers into more full-time park-goers? Vaccination rates were high this summer, leading business and vacation travel to resume to some sense of normalcy. Since Hampton Roads has some of the most beautiful parks in the Commonwealth
To view September's full economic monthly report, click HERE.
Annualized Growth in GDP
Gross Domestic Product combines consumption, investment, net exports, and government spending to determine the size and general health of the economy. Real GDP increased 2.1% in Q4 2019 (GDP also grew by 2.1% in Q3 2019). The growth is driven in part by consumer spending, government spending, housing investment, and exports, while imports decreased. There was a decrease in inventory investment (-1.09%) as well as a reduction in business investment reflecting a decrease in structures and equipment.
Retail sales in Hampton Roads, as measured by the 1% local option sales tax, serve as an indicator for consumption in the region. Retail sales have bounced around, but after a surprisingly weak June, they continue to recover handily through to December (seasonally adjusted 3 month M.A.). Sales increased by 7.4% in December, making it Hampton Roads’ best December for total retail sales in recent years. Much of the recent growth in retail sales across the Commonwealth has been the result of increases in the number of online sales that are subject to tax.
New Car Sales
Car sales, as a durable good, may be put off until an individual’s economic prospects improve; thus, the number of new car sales indicates the level of confidence that households in Hampton Roads have in their financial future. Car sales have decreased and stabilized after an unusually strong September, hovering near the averages that have been observed over the past few years.
Hotel sales indicate the performance of the region’s tourism sector. In Q3 2019, accommodation sales decreased by 3.5%, settling at $220 billion for the quarter. This continues a pattern of slowing sales between second and third quarters in recent years, however, Q3 accommodation sales in 2019 increased 5.4% over Q3 2018. This shows accommodation sales are still trending upward from late-2013 lows.
Non-agricultural civilian employment figures are considered the best estimate of labor market activity by the National Bureau of Economic Research. According to data from the Bureau of Labor Statistics, Hampton Roads employment increased for the third month in a row since a recent high in June, to 796,600 positions in December of 2019. This figure represents a 1.05% growth from the same month in the previous year.
Employment Growth by Industry
As the job market grows or declines, there will be some industries whose experience does not resemble the regional trend. Several industries have seen significant decline year-over-year using BLS data, including Administrative & Support and Local government. The Construction and Leisure & Hospitality industries continue to see the largest increases in jobs when compared to the previous year, signs of strength due to their key role in the regional economy.
The unemployment rate is the percentage of the population actively seeking work but unable to obtain a position. Hampton Roads’ unemployment rate plateaued in December 2019 at 2.93%, the same rate it was in November. Comparatively, the national unemployment rate decreased again in December from the previous month to 3.5%, hovering at record lows.
The number of initial unemployment claims is a leading economic indicator reflecting those who are forced to leave work unexpectedly, thus revealing the strength of the job market with little lag time. Seasonal adjusted unemployment claims decreased in January 2020 to 2,438 claims, a decrease from December of 2019 but still above November’s recent low. This January number of claims represents a 17.6% decrease from the same month in 2018.
Permit data signals the level of construction employment and confidence regarding the future trajectory of the local economy. The level of new construction permitting for single family homes in December decreased to 352 permits, but when seasonally adjusted represents a slight increase relative to November. As the market continues to respond to the recently lowered federal interest rates, this indicator will be interesting to watch closely.
Home Price Index
The home price index measures the value of homes by evaluating changing price levels through repeated sales of properties. The index provides the highest quality data available on the trends in the real estate market. Hampton Roads’ home prices increased, yet again, by 4.2% over the previous year in Q3 2019, remaining below both the state and the nation. Regional housing values remain 4.3% below those seen during the peak of the housing boom.
Settled Home Sales
Settled home sales measure the level of transactions on the real estate market over time, and a healthy real estate market should have a consistent level of activity. The levels of existing home sales have been strong recently, with sales maintaining the same average level as during the housing boom in 2005. New construction sales in January saw a slight dip from December, continuing to represent roughly 11% of all sales.
Foreclosures have a significant impact on the real estate market and community, depressing home values on a neighborhood and regional level. Distressed homes’ share of total sales has particularly been shown to impact the sale price of existing homes. The foreclosure level is still elevated from the housing boom, but has been steadily declining, showing some of the lowest rates since 2009. Foreclosures constituted 4.2% of all home resales in December of 2019, down from a recent high of 8.1% in April of 2016 (12-month average).