by Greg Grootendorst, Chief Economist and Katherine Rainone, Regional Economist
The Virginia Department of Health has been meticulously tracking data on the spread of the novel coronavirus since the first recorded case in the Commonwealth in early February. The state is tracking total cases, hospitalizations, deaths, daily new cases, demographic information, testing information and so much more, and providing the information for each individual locality in Virginia.
The Hampton Roads Planning District Commission Planning Department built an online dashboard to track data at the local and regional level: the regional 7-day moving average of daily new cases, confirmed total cases, hospitalizations and deaths as well as cases per 10,000 population per locality, as well as rate of cases by zip code, race, gender and age. In addition to health data, certain transportation and economic data are updated weekly as it pertains to traffic volumes, vehicle miles traveled, and unemployment claims, which are three of the most immediately available indicators of the impact COVID-19 may be having on the regional economy. Click here to access the Hampton Roads COVID-19 Impact Planning Hub.
As the 7-day moving average of confirmed cases in Virginia has been steadily decreasing, recently reaching a plateau, the data in Hampton Roads looks to be telling a different story (see figure below). While it’s difficult to know if transmission of the coronavirus is increasing in the region or if the increased availability of testing is leading to the current surge of daily cases Hampton Roads is experiencing, the data is showing an uptick in the 7-day moving average. June 26 saw the highest recorded daily new cases in Hampton Roads since the state started tracking data. Regional data also reveals that the highest reported cases are among people aged 20-29, the highest number of hospitalizations are among people aged 70-79, and the highest number of deaths in Hampton Roads are among people over 80 years old.
It’s important to keep an eye on this data, as many states are seeing record numbers of daily new cases after their economies reopened. On Friday, June 26, the Governor of Texas paused the states’ reopening and ordered all bars to close, followed by similar closures in Florida. New York, New Jersey and Connecticut recently announced mandatory quarantines from visitors from new coronavirus hotspots, which is likely to affect the hospitality industry as it greatly reduces the incentive for tourists and business travelers alike. The E.U. has commented that travel may be banned from the U.S. to Europe, serving another potential blow to the air travel industry. If further closures in Hampton Roads are required, the economy is surely to be impacted once again, slowing the recovery we may be experiencing based on May’s job increases.
To view June’s full economic monthly report, click HERE.
Source: Hampton Roads Planning District Commission, Virginia Department of Health
Please note: The indicators included in this monthly report are generally on a one- to three-month lag, which means the following graphs are only just beginning to reveal some of the economic impacts of COVID-19.
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).
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