Thanks for supporting the National MS-Society during our August 16 – 17 ride from Cleveland Ohio to Sandusky. With your help, Cycle Times raised a total of $6,965! Below are some of our team photos.

The Jamestowns 2007 economic impact study that Chmura Economics & Analytics wrote was recently featured on dailypress.com: 400th anniversary gala sparked $1.2 billion in sales statewide. Here are some exceprts from the article:

WILLIAMSBURG - Visitor spending associated with the 400th anniversary of Jamestown's settlement generated more than $1 billion in statewide sales last year, according to a new report.

Jamestown 2007, a sub-agency of the Jamestown-Yorktown Foundation, commissioned Chmura Economics & Analytics to conduct a fiscal impact study of the anniversary. The final report was released Tuesday.

The 400th anniversary was observed through 18 months of events and programs that culminated in May 2007 with a visit by Queen Elizabeth II of England and America's Anniversary Weekend festivities attended by President Bush.

According to the Richmond firm's research, a total of $1.2 billion in sales was generated throughout Virginia in conjunction with anniversary celebrations. 

That figure includes $172.8 million in direct visitor spending at commemoration events, $566 million in facilities improvements and event staging and other indirect, or "ripple effect" spending, said Linda Stanier, a Jamestown 2007 spokeswoman.

Anniversary-related spending produced about $22 million in tax revenue to the state and about $6.4 million for local governments, the report stated.

In addition, the celebrations created more than 20,000 jobs, according to the report. Stanier said the full- and part-time jobs consisted of permanent, temporary and seasonal positions, but she was unable to provide a break down.

During 2006 and 2007, national and international interest in the 400th anniversary generated more than 12 billion Jamestown references in various media, including Web sites. That exposure contributed to a boost in attendance at Historic Triangle establishments of 30 percent to 60 percent during 2007, the report stated.

Even though the nation's flagging economy has diminished tourism-related figures for 2008, officials are still hopeful gains from the 400th anniversary will produce long-term benefits.

"No one has a crystal ball with so many factors involved," Stanier said. 

"People are looking at things in different ways and are making different choices. It's going to change — tomorrow, I hope. I do believe a new perception of Jamestown and the role Virginia played will continue to reap benefits in many different ways."

Listen to an excerpt of Chris Chmura's interview on 90.3 WCPN, a local Cleveland radio station, regarding the Cleveland economy.

For the second year running, Ohio has two cities among the nation's poorest. According to U.S. Census numbers, almost 30 percent of Clevelanders lived in poverty last year, making it the second poorest city, Cincinnati comes in tenth with almost 24 percent poor. The unfortunate ranking isn't new, nor is the cause. Economist Chris Chmura, publisher of "Ohio Economic Trends," says former industrial cities hit hard by the auto industry and sub prime loan crisis have to wise up -- fast.

CHMURA: “Knowledge-intensive industries are those that are growing at a faster pace, and paying higher wages. The Cleveland area has not transitioned as quickly as some other areas of the country.”

Chmura says the Census report focused only on the cities, but Cuyahoga county’s employment rate also has declined steadily since 2000—and more bad numbers are certain from 2008.

However, the economist says Cleveland has strong institutions like the Cleveland Clinic, museums and its sports teams that should buy the city time to make an economic comeback.

Emily Dooley, staff writer for the Richmond Times-Dispatch, quotes Chris Chmura in her most recent article: "Expect strong economy in 5 years, experts say".  Some excerpts:

...

Within five years, housing prices should stabilize and jobs should return.

"By 2013, you should be feeling pretty good about economic growth," said Christine Chmura, president and chief economist for Chmura Economics and Analytics in Richmond.

Inflation likely would level off to a safe 2 percent annual rate, well below the 5.6 percent reported for July because of higher transportation, food and energy prices.

Signs of a rebound in the housing market should come near the end of 2009, she said.

Jobs lost during the slowdown should return after that. By 2011, the economy should pick up speed followed by two years of economic growth, Chmura said.

...

The "Jamestown 2007" economic impact analysis report, which was recently completed by Chmura Economics & Analytics, was released today. Read the full report here: Economic Impact Analysis of the America’s 400th Anniversary: Jamestown 2007 Commemoration on the Commonwealth of Virginia.

Here are some highlights from the report:

The America’s 400th Anniversary: Jamestown 2007 Commemoration was a series of events spanning 18 months, highlighting the 400th anniversary of Jamestown’s establishment as the first permanent English settlement in North America. The Commemoration activities were coordinated by Jamestown 2007, a sub-agency of the Jamestown- Yorktown Foundation. The series of events included 13 Signature Events staged by Jamestown 2007, highlighted by America’s Anniversary Weekend in May 2007. Additional events included those organized by other agencies or institutions in partnership with Jamestown 2007, as well as hundreds of community events staged by local organizations throughout Virginia. These events attracted more than three million participants, including visitors from Virginia and from outside the state and the country.

The Commemoration was a public-private sector effort that involved 10 years of planning and development. To organize the events and prepare for the influx of visitors, the Commonwealth of Virginia, communities, businesses and institutions around the state, invested millions of dollars to improve roads, refurbish historic buildings, enhance and/or expand facilities, and produce major exhibits and displays.

This capital spending, in addition to visitor spending in Virginia related to the Commemoration, contributed positively to the Commonwealth’s economy in terms of sales, jobs and tax revenues. As reviewed in this report, America’s 400th Anniversary Commemoration:

• Generated $1.2 billion in sales in Virginia,
• Created an estimated 20,621 jobs in Virginia,
• Provided an estimated $22.0 million in tax revenue for Virginia and $6.4 million in tax revenue for local governments, and
• Promoted Virginia’s tourism industry and increased exposure of Virginia as a tourism destination through editorial coverage that generated more than 12 billion media impressions.

Chmura Blog reader, Cliff Fox, recently asked the following question:

Aren't the financial challenges currently facing our economy the result of overly rapid development of the "global economy"? I am not an economist; however, the U.S. in exporting its industrial base attempted to rotate housing and commercial real estate development into primary versus their typical secondary economic status. This was driven by the financial markets. A primary economy will export a product and import money to fuel its regional and secondary economies. At areas loose or diminish those primary economies at some point the local consumer who is not importing dollars is going to run out of money to support the areas secondary economies. In other words consumers that are not importing dollars will not be financially capable to purchase goods and services. The financial markets appear to have leveraged the development of the emerging global economy by overly stimulating secondary economies, low interest rates, to improve the purchasing power of those consumers and production in the emerging markets. Timing is crucial in executing this global development. Conceptually, one would want the consumers in the emerging markets to increase their purchasing to balance trade an re-invigorate, in this case, the US economy. My question is what is wrong with this thinking? Thanks Cliff Fox

Here is the response from the Chmura Economics & Analytics staff:

You are correct in indicating that “Conceptually, one would want the consumers in the emerging markets to increase their purchasing to balance trade and re-invigorate, in this case, the US economy” and for highlighting the importance of global demand. From an economics perspective, however, your argument is flawed in the following manner:

1. Your assessment of outsourcing and the expectation that somehow consumers will all run out of money worldwide (narrow view of balance of trade),
2. Only primary sectors generate value added,
3. Generalization vs. specialization - many areas have substantial agricultural subsidies and fiscal incentives for mining and related activities to preserve domestic primary economic sectors often at great cost to the consumer
4. Housing and commercial real estate development can never be technically classified as primary sectors, except in the sense that they generate secondary markets in the resale of houses, although they may be very important.

Primary economic sectors do not indicate their importance to the economy, but rather their “proximity to nature.” Agriculture and mining are typically considered to be primary sectors of the economy that provide raw materials to manufacturing and construction (secondary sector). Services are classified as tertiary. This classification system was developed by Fourastie. Primary markets also deal with the initial trade in a good or a service. Secondary markets exchange goods traded in primary markets. Although this does not seem to be what you are referencing.

The theory developed by Fourastie would suggest that development moves in a natural progression from primary to secondary to tertiary economic activities. It seems the argument in your blog entry questions the potential for all economies to move to tertiary activities simultaneously and seems to suggest that is the cause of weak economic growth in the US today.

The financial challenges currently facing our economy are the result of secondary housing markets and high oil prices. Mortgages issued to households with poor credit are typically offered at rates that incorporate a risk premium. These mortgages are often traded in secondary markets and used as collateral for various financial instruments. As the housing assets depreciated the debt-asset ratio is fairly high and in many cases, a family or bank cannot sell a property to recoup its debt. In addition to creating a balance sheet loss this also caused problems in the secondary mortgage markets and for investors with a significant stake in mortgage backed securities that lost value as well. These had the effect of reducing aggregate demand.

Last year, the federal government increased the money supply by purchasing federal government bonds and securities and lowered the interest rate. A lower interest rate stimulates aggregate demand by reducing borrowing costs, stimulating investment in the domestic economy and the purchase of durable goods by households. Also, by reducing the foreign exchange rate of the dollar, the lower price of US exports and the higher relative price of foreign produced goods lead to higher aggregate spending on goods produced in the domestic economy.

The balance of trade reflects the comparative advantage of regional economies. The export of some segments of the manufacturing industry is largely the result of wage differentials in low-skilled employment across countries. Due to the fall in value of the US dollar, a natural outgrowth of the economic situation in the country, US exports are becoming much more competitive in European markets and in Southeast Asian markets as well. This in fact works to check the “export of its industrial base” as more manufacturing jobs return to the US. Some have also highlighted the increase in the costs of raw materials due to tight supply/demand conditions, particularly energy, which have increased transportation costs and also worked to reduce the cost savings from manufacturing abroad.

Geographic specialization in agriculture, manufacturing and services in regions with a comparative advantage in those areas coupled with free trade across countries and regions implies that it is not possible for areas to “run out of money” in the manner described in your blog. The secondary sector of the economy produces value added through the transformation of raw materials into finished products, exporting these goods in many instances to obtain currency for the purchase of goods and services. Furthermore, the export of US dollars and the creation of foreign debt in purchasing exports from abroad, including OPEC nations as well as emerging economies with a growing manufacturing base is an important part of the current accounts balance in the US. It would be incorrect to view bilateral trade in isolation or to view the current account balance only with emerging economies.

Financial markets have responded to economic growth in emerging markets as these represent areas where investments can yield high rates of return, partly due to the risk associated with investment in these areas. This risk is quite clearly visible during the 1997 Asian financial crisis, as foreign debt to GDP ratios grew substantially and financial market faced a significant correction.

Market forces are crucial in determining the pace of development and various dynamic feedback mechanisms exist that ensure that corrections take place when the economy over heats. Clearly, these corrections can be painful and often the public sector works to smooth out these cycles. Thus the timing of open market operations by the Federal Reserve can be crucial as well.

The following article, Coping with hard times, was written by Robert Powel at Virginia Business Magazine:

Virginia businesses face soaring gasoline prices and a slowing economy as they enter August. What are their prospects for the last four months of the year and for 2009?

Virginia Business teamed up with Richmond-based Chmura Economics and Analytics to provide a forecast for the state and six of its major regions. Economist Christine Chmura expects Virginia to fare better than the nation as a whole, but she anticipates that the depressed housing market will continue to drag on the commonwealth’s economy.  Robert Burke reports on her findings beginning on page 16.

Much of the country’s growing economic woes are tied to the subprime mortgage crisis, which has hurt many banks. On page 83, Doug Childers examines what banks in Virginia and elsewhere are doing to rebuild their capital and provide more loans.

The economy’s problems have punished the stock market, making the task of saving for retirement even more difficult for baby boomers. Aaron Kremer reports on page 85 that many boomers already consider themselves part of the “sandwich generation,” squeezed by growing financial responsibilities for college-age children and aging parents.

These problems call for the expertise of financial experts, such as the men and women represented in our annual CFO of the Year awards. On page 67, you will meet the five winners of this year’s contest, profiled by Donna C. Gregory and Heather B. Hayes.

These CFOs helped their companies handle adversity and continue growing. We would like your help in identifying other Virginia companies that are finding a way to succeed despite the worsening economy. Go to VirginiaBusiness.com to nominate a company or enter your own firm for the 2008 Virginia Small Business Success Story.

Virginia Business has teamed up with up Chmura Economics & Analytics in Richmond to take stock of the commonwealth’s economy. Here are some excerpts from this report which offers an overall assessment and a look at conditions in regions throughout the commonwealth.

If you’re looking for good economic news, good luck, because there’s not a lot of it out there. In Virginia and across the U.S., many numbers that economists track now point in the wrong direction, says Richmond-based economist Christine Chmura.

Unemployment is up and job growth is slumping, with many losses in Virginia’s hard-hit construction sector. Virginia’s job growth was an anemic 0.5 percent for 12 months ending in April, compared with 0.3 percent in the nation. Houses aren’t selling, consumer confidence is dropping and gas prices are pushing the cost of almost everything up. “The economy, at best, is creeping,” says Chmura.

A standard rule of thumb for defining a recession is two consecutive quarters of declining real (inflation-adjusted) gross domestic product. Real U.S. GDP grew 1 percent in the first quarter, but there’s growing consensus that we’re in a recession. Chmura says the National Bureau of Economic Research likely will declare that the recession began in the first quarter and that it will last into the third quarter before the national economy begins a slow recovery.

The question now is: How long will it take to get through this? This spring Chmura predicted real U.S. GDP would shrink 0.3 percent in the second quarter before beginning a slow rebound over the next several quarters. But the economy is shedding job 438,000 in the first six months of this year. With the Federal Reserve signaling it will hold firm on interest rates, home prices still falling, banks tightening credit, and oil prices rising, Chmura now is leaning toward a slower recovery.

It’s not that things have been going terribly around the state, where growth typically is above the U.S. average and unemployment is lower. Virginia’s GDP was nearly $321 billion in 2007, up 1.9 percent from 2006, according to the U.S. Bureau of Economic Analysis, which has since stopped tracking state-level GDPs.

In the 12 months ending March 2008, most regions around the state added jobs, though not many. Meanwhile, the state’s biggest regional economies, in Hampton Roads and Northern Virginia, still are getting billions of federal dollars. Plus, port business in Hampton Roads continues to grow but at a slower clip.

Even so, the downturn in the housing market and the spillover effects of the subprime mortgage crisis on the banking industry are going to be tough to escape and could be a drag on economic recovery in many places, says Chmura.

Northern Virginia, for example, saw months of double-digit appreciation in home values a couple of years ago. Now, just 31 percent of potential buyers in the Northern Virginia market could afford a median-price home in the first quarter, according to Chmura estimates, compared with 40 percent statewide and nearly 44 percent in the U.S. Overall, six of the state’s largest metro areas were above the national average in affordability during the first quarter.

The presence of fewer home buyers means less construction, lower retail sales, and so on. “This time it doesn’t matter how much the Federal Reserve lowers interest rates,” Chmura says. “People are not going to start buying homes until they become more affordable. So this slow period is different.”

Sectors faring poorly in Virginia include manufacturing, which shed 3,888 jobs in the past year. Construction lost 5,645 jobs, while the finance, insurance and real estate sector shed 3,124 jobs. The leading sector for employment growth was education and health, which added 11,546 jobs.

Chmura says it’s not unusual for colleges to see higher enrollment during slow economic times, because students can’t find jobs and decide to stay in school. Plus, the health-services sector is generally immune to business cycles.

Federal spending continues to pump up key economies here, mostly in Northern Virginia and Hampton Roads. Even that is slowing, though. “We just don’t have the growth rate” seen a few years ago, when federal spending climbed about 9 percent a year in the Washington region, says John McClain, deputy director of the Center for Regional Analysis at George Mason University.

Last year’s spending was up just 2.5 percent over the previous year, he says. So while the region is still adding jobs it won’t add as many. This year’s projection is 12,000 new jobs, compared with 35,000 in 2006. “It hasn’t gone down; it’s just slowed way down,” McClain says.

What’s to come? Building permits will keep dropping this year and next year, Chmura predicts. Job growth will be minimal for 2008 — 0.5 percent — but climb 1.2 percent next year. Retail sales should stay flat at 0.3 percent growth this year but climb 3.6 percent in 2009, she says.

Still, much depends on how other factors — inflation, fuel prices, mortgage and unemployment rates — play out. Yet in the downside of a business cycle it’s worth keeping a little perspective, says McClain.  “These aren’t bad times, really. They’re only bad by comparison to what they were.”

...

Read more in the original article: Slow home sales could continue to drag on Virginia’s economy, by Robert Burke

By CHRISTINE CHMURA
TIMES-DISPATCH COLUMNIST

As the national economy goes, so go the regions in Virginia. Well, not always.

The latest data for nonmetropolitan areas show that employment in Southwest Virginia grew 1.4 percent last year, compared with 0.9 percent in the state.

The region encompasses the counties of Lee, Wise, Scott, Buchanan, Dickenson, Russell and Tazewell and the city of Norton.

Not only is Southwest Virginia growing at a faster pace than the state, it's growing faster than Northern Virginia, which advanced just 1.0 percent in the same period. In fact, Southwest Virginia has been growing faster than Northern Virginia since the first quarter of 2007.

Part of the growth in the southwestern part of the state has occurred because increased oil prices have caused resurgence in the demand for coal as a fuel source and component of products such as steel.

No surprise, then, that Alpha Natural Resources of Abingdon agreed to be bought by Cleveland-Cliffs, a producer of iron ore. Based on the details of the purchase, it looks like Alpha shareholders will receive a premium of about 30 percent over their shares. That kind of wealth flowing into the region will undoubtedly spur growth in other industries.

Coal mining employs nearly 3,800 workers in Southwest Virginia at an average annual wage of about $61,000, compared with $31,000 for all jobs in the region. But mining, which makes up about 6 percent of total employment in the region, is not the only driver of growth.

Most major sectors in the region are growing, but health care added the most jobs during the past year. A sector called administrative support added almost as many jobs as health care. It includes a variety of industries including telephone call centers and temporary help agencies.

The employment trends in Southwest Virginia run deeper than the occasional but short-lived employment surge that oftentimes sparks rural economies. The most region-changing events in the evolution of the southwest's economy have been the addition of CGI and Northrop Grumman -- two high-tech companies that are adding a significant number of jobs to the region with most at wages much higher than the average.

These economic development successes have not occurred without significant work and foresight on the part of developers and residents in Southwest Virginia. As coal was in decline, they saw the need to diversify and the importance of broadband access. Major funding through grants from the U.S. Department of Congress and the Virginia Tobacco Indemnification and Revitalization Commission laid the fiber-optic backbone that supported broadband growth there.

Now, as national and state growth have slowed, Southwest Virginia is proving that rural economies can change and thrive.

Christine Chmura is president and chief economist at Chmura Economics & Analytics. She can be reached at (804) 649-3640 or via the website: http://www.chmuraecon.com/

This article was originally published in the Richmond Times-Dispatch on July 28, 2008.

Louis Llovio, staff writer for the Richmond Times-Dispatch, quoted me in his article Coming to Short Pump:

...
West Broad Village will be the second major development in the county to open within the next year. The Shops at White Oak Village is set to open in eastern Henrico in October.

Christine Chmura, president and chief economist for Chmura Economics & Analytics, said it's not the best time for large-scale developments.

However, Richmond is growing faster than the rest of the state, and the area's economy will be able to support the expansion, she said.

White Oak will benefit from growth at Fort Lee, which is about 25 miles from the eastern Henrico shopping center, Chmura said. "The expansion will greatly add to the demand for that center."

Right now, West Broad Village looks like a mega-sized construction site with half-finished buildings and dirt -- lots of dirt.
...

Read the full article.

The Free Enterprise Forum recently posted an article covering the latest Thomas Jefferson Institute for Public Policy publication, "The Housing Recession".  This annual publication is written and researched by Chmura Economics & Analytics. Free Enterprise Forum states that this report “required reading for all citizens living in the Old Dominion.”  Here are some additional excerpts from the article:

Economists (and politicians) are always very careful about using the “R” word.  According to many that study the “dismal science” the mere mention of a possible recession can in fact trigger human behavior that results in a recession.  So when a highly respected economist focuses on the Old Dominion and uses Recession in the paper’s title, we take note.  Importantly, the paper backs up the theory with significant data, analysis and regionally specific forecasts for the year ahead.

“The Housing Recession” is the title of The Thomas Jefferson Institute for Public Policy’s Virginia Economic Forecast 2008-09.  Researched and written by noted economist Christine Chmura, Ph.D. of Chmura Economics & Analytics, this fascinating paper foresees lower than potential growth through 2009.  The paper highlights concern about energy prices and their impact on inflationary pressures as a risk to growth expectations.

According to the report, the Charlottesville metro area experienced 12 quarters of double digit home price growth from Q4 2003 - Q3 2006.  Such a high rate of price growth negatively impacted the housing affordability in the region which stood at 32.3% at the end of 1st qtr of 2008 (defined as percent of households that could afford a median priced home as estimated by the Chmura Home Affordability Index).  This is significantly lower than the state’s affordability rate of 39.2% and the national rate of 43.7% for the same period.

...

The Thomas Jefferson Institute for Public Policy report should be required reading for all citizens living in the Old Dominion.

Read the full article here: Recessionary Required Reading

Emily Dooley of the Richmond Times-Dispatch writes:

Recession-proof businesses - and jobs - do exist.

Many are necessity-based, experts and economists say.

Health-care operations, for instance, tend to be one of those businesses.

"The health-care industry is fairly recession-proof because if you're sick, you go to the doctor or the hospital regardless of your work situation," said Christine Chmura, president and chief economist for Richmond-based Chmura Economics & Analytics.

An aging population also fuels demand in this industry. Careers should stay in demand for years to come with stable prospects for doctors, nurses, pharmacists, physical therapists and physician assistants.

Other industries that offer a perceived better path to employment, such as colleges and universities, also do well.

"Higher education typically sees some increase in enrollment during a recession because some displaced workers or students who can't find jobs decide to get further education as opposed to continuing to look for work," Chmura said.

College enrollment is rising as the number of 18to 24-year-olds increases. More adults are returning to school to enhance career prospects.

Read the rest of the article.

By CHRISTINE CHMURA
TIMES-DISPATCH GUEST COLUMNIST

You would think we'd have a clearer picture by now whether we're in recession. In some ways it seems to be the opposite.

Some economists remain adamant that the nation won't go into recession. They point out that real gross domestic product rose in the first quarter. They argue that the stimulus checks soon will provide consumers with extra buying power and that lower short-term interest rates will act as a stimulus as well.

Those who think the nation is in recession point out that real GDP is an average of the first quarter compared with an average of the fourth quarter. For that reason, it can miss a change in the monthly trend that began within the quarter.

The change in the components of real GDP between the last two quarters also is more indicative of a recession in the first quarter even though both quarters grew at an annual average 0.6 percent rate.

The pace of consumer spending slowed significantly in the first quarter -- spending on goods contracted and services more than offset the decline. Spending by firms on software, equipment and buildings contracted in the first quarter in contrast to a moderate pace of growth in the fourth quarter.

Residential investment declined at a slightly faster pace in the fourth quarter than in the first. Growth in net exports and government spending, however, offset some of the contracting sectors in the first quarter.

Consumer spending, which makes up about two-thirds of GDP, will be a significant factor in determining whether second-quarter growth remains positive.

From my vantage point, consumers have a few forces weighing against them. With home prices falling in many regions around the nation, many homeowners no longer have the equity to tap for spending.

Employment has contracted each month since January and the unemployment rate has risen. Along with a sharp drop in consumer confidence, these trends suggest further caution in consumer spending.

Of course, consumers can borrow to maintain their standard of living, but the latest Federal Reserve survey of loan officers indicates that banks have made it harder to obtain loans.

Lastly, gasoline prices have continued to climb and put a dent in discretionary income. All these forces point to a consumer who probably will remain hamstrung for at least another quarter or two even with the stimulus check.

Businesses also are cautious, as indicated by the increase in layoffs and net decline in employment.

The U.S. economy is like an aircraft carrier -- it doesn't turn on a dime. Negative momentum is likely to continue to slow it down for the next quarter or two.

But even if real GDP does not contract for two quarters, it's clear that for all intents and purposes the economy has stalled, and most forecasters expect it to remain in that state for at least the second quarter, if not the third.

Christine Chmura is president and chief economist at Chmura Economics & Analytics. She can be reached at (804) 649-3640.

This article was orginally published in the Richmond Times-Dispatch on May 19, 2008.  Read the original article here.

Harry Minium of The Virginian-Pilot referenced a Chmura study in his article Slump doesn’t slow tide of projects in downtown Norfolk:

...

City leaders have spent money on downtown redevelopment over the objections of some community leaders, including members of Norfolk Tea Party II, an anti-tax group, which has said the city has neglected many of its neighborhoods.
 
But the city’s downtown investments have resulted in increased tax revenues, Fraim said. A study done for the city by Chmura Economics and Analytics, a Richmond firm, found that from 1996 to 2006, downtown generated $18.5 million per year in taxes in excess of what the city was spending there. Employment downtown also has increased, from 16,916 jobs in 1996 to 24,933 jobs in 2005.

...

Monday, April 21, 2008.
By CHRISTINE CHMURA
TIMES-DISPATCH COLUMNIST

We've now logged four months of contraction in key economic indicators. Along with continued signs that the credit crunch is affecting the overall economy, it's highly likely that the nation is in recession.

Recessions are tough on people who lose their jobs and businesses that have to deal with reduced revenue and profit. But can anything good come out of a recession?

Yes, recessions often make businesses more efficient. During times of strong growth, some businesses don't notice the fat they are taking on. Or they may not realize that new technologies have increased their efficiency to a point that reduces labor needs.

The proliferation of computers in the 1980s, for example, gradually encouraged employees in offices to create letters and reports directly in electronic form rather than dictating or writing in long hand to be transcribed. The efficiencies gained from this shift in administrative work from secretaries to higher-level office workers was largely realized during the 1990 recession. Firms were looking for ways to cut costs and found that fewer administration assistants were needed.

This recession already is bringing efficiencies to businesses associated with residential real estate, which has been hardest hit by the slowdown.

John McGurn, Realtor with Re/Max Commonwealth, said slower sales and higher gas prices "have encouraged me to organize my days better to minimize trips. When the housing market was booming, I did not worry about taking multiple trips to the same location."

He also has a service that he sets up for clients that sends them an e-mail with details, including pictures, of any new listings that fit their needs in terms of price, location and other factors. Driven, in part, by higher gas prices, this expanded use of the Internet provides more efficient use of time for McGurn and his clients.

And undoubtedly, financial institutions are becoming more efficient around mortgage lending to more accurately assess the credit risk of potential homeowners, as well as assessing the risk of complex financial instruments they put on their balance sheets.

Without heavy rain storms, a leaky basement or roof may go unnoticed for years, and the related damage can be significant to repair. So, too, recessions often highlight a business's point of weakness in need of attention. In the long run, we are better off with the correction.

The world lost a wonderful economist and a fantastic person late last month. Dan M. Bechter, Ph.D., died March 26 at age 69.

When I was a young economist at the Federal Reserve Bank of Richmond, Dan served as a mentor to me and others who continuously wanted to learn.

When presented with an opportunity, he would teach us how to apply economics by thinking out loud about how an event might work through the economy. He was also an excellent writer and was generous and patient in taking time to help us develop our writing style.

I am probably only one of many who would say that my career would not have been as successful without Dan's influence. He clearly made the world a better place through the people his life touched.

Even in his retirement, Dan continued to help me improve. As you are reading this article, I am missing his Monday morning e-mail critiquing this column. More so, I'll miss his examples of enjoying his retirement years and hearing about the many successes of his family members. 

Christine Chmura is president and chief economist at Chmura Economics & Analytics. She can be reached at (804) 649-3640 or receive e-mail at www.chmuraecon.com.

In his article, Government work force rises, Will Jones of the Richmond Times-Dispatch writes:

Just as the Richmond area is growing, so is its need for teachers, librarians, police officers, dispatchers and other municipal workers.

The number of full-time equivalent jobs at local governments and school systems in the 20 localities in central Virginia increased by 1.5 percent in 2008 compared with the prior year.

"Municipalities play an important role in Richmond's economy," said Christine Chmura, president and chief economist for the Richmond-based consulting firm Chmura Economics & Analytics. "The government sector tends to be more stable than the private sector."

With the economy faltering, Chmura said she expects slower growth and perhaps some losses in municipal jobs during the next year even though the region continues to add residents, which drives the need for more teachers, police officers and other workers.

In some respects, Chmura suggests thinking of the large localities, particularly Chesterfield and Henrico, as having the same impact as major private and state employers such as VCU Health System, HCA and Capital One.

Chesterfield, which leads the region with more than 311,000 residents, also has the most municipal employees, 11,067.

Yet, with a region-high of nearly 58,000 students to educate, a large share of Chesterfield's total number of employees work within the school system. The number of teachers, administrators, custodians and other school employees outpaced their counterparts in county government nearly 2-to-1.

At the same time, Chesterfield has fewer government-only workers than Henrico and Richmond.

Henrico had 1.49 percent more government-only employees in 2008 compared with the prior year.

Richmond had the largest number of full-time government jobs among the 20 localities in central Virginia -- at 5,039 workers, up 0.44 percent from the previous year.

Richmond, with its greater challenges with crime and poverty, also is the only locality with more government workers than school workers. Nearly 60 percent of Richmond's municipal employees work in its government.

By contrast, Powhatan County has the largest percentage of municipal jobs assigned to schools. About 84 percent of the county's total employees work in the school system.

That isn't likely to change anytime soon as largely rural Powhatan continues to develop and attract new residents, including many families from Chesterfield.

A testament to that growth in Powhatan is the planned Flat Rock Elementary School.

By this fall, the school will open its doors to hundreds of students, plus its own set of teachers, custodians, administrators and other workers.

Emilio Dooley of the Richmond Times-Dispatch writes:

Finance edged by health care as top employer
VCU Health System No. 1 for first time among private firms
 
Sunday, Apr 20, 2008

TOP 50 AREA EMPLOYERS
The Richmond Times-Dispatch's 16th annual Top 50 area employers section examines trends in full-time equivalent employment in the major industry sectors in the area.

By EMILY C. DOOLEY
TIMES-DISPATCH STAFF WRITER

When it comes to top employers, health care is taking the place of financial firms that once dominated the local scene.

Virginia Commonwealth University Health System ranked No. 1 for the first time on the Top 50 list of private area employers this year, increasing the number of full-time equivalent workers by 1.32 percent to 7,082 employees.

As in past years, three health-care organizations -- VCU Health System, HCA Inc. and Bon Secours Richmond Health System -- had places among the top 10 spots.

All three added positions to keep up with the demands of aging baby boomers.

"We're all expanding," said Dr. Sheldon Retchin, chief executive of VCU Health System and vice president for health sciences at the university. "As boomers started to age, the demand heated up."

Three financial institutions remained in the Top 10 as well, but each reduced the number of full-time employees.

Capital One Financial Corp., Wachovia Corp. and Sun Trust Banks cut their total work forces by the equivalent of nearly 1,000 full-time employees, or 6 percent.

Five years ago, the same players were involved but their roles were swapped.

In 2003, the top three financial firms combined had the equivalent of 17,414 full-time employees, while health care at the time had 15,707.

Today, health care firms in the top 10 account for 19,315 workers.

"The Richmond economy continues to be dominated by finance and health care firms with health care continuing to increase in employment," said Christine Chmura, president and chief economist for Chmura Economics & Analytics.

"The health care industry, in general, doesn't respond much to the business cycle," she said.

The Richmond area is home to 22 hospitals and has more than 5,700 hospital beds, according to a community profile from the Virginia Economic Development Partnership.

Statewide, 11 of the 20 occupations projected to grow by 2014 are in the health care field, the state agency said.

In the Richmond area, 15 of the 20 growth occupations are projected to be in health care, the partnership reports.

Home health aides and personal and home-care aides top the list. Occupational therapists and substance abuse and behavioral disorder counselors also are included.

The other five occupations on the list were in non-health care jobs relating to computer and technology industries.

Demand for dentists, hygienists, physical therapists, pharmacists and nursing home staff also is expected to increase. "It doesn't take a rocket scientist to think about what the elderly are going to need," Retchin said.

All that need could spell trouble for the industry.

"There's a potential shortage out there," said Patrick Farrell, president of the HCA Richmond Health System, which operates six area hospitals.

By 2020, the U.S. may need an additional 200,000 doctors and 800,000 nurses, according to the Council of Physician and Nurse Supply, a new organization based at University of Pennsylvania's Leonard Davis Institute of Health Care Economics. The group was formed to address staffing shortages in the industry.

A 2004 report by the State Council of Higher Education predicted that Virginia will be short 22,600 more full-time registered nurses by 2020.

"One of the greatest limitations is the work force," VCU's Retchin said.

Mindful of that, VCU Health System, HCA and Bon Secours report that they focus on retention and training, as well as education.

VCU Health System includes five schools -- for dentistry, medicine, allied health professionals, pharmacy and nursing -- and Bon Secours has a nursing school that graduates 120 nurses every year.

"Our goal is to hire 100 percent of these nurses into our organization," said Bonnie Shelor, senior vice president for human resources at Bon Secours.

Perks, such as offering on-site day care, continuing education opportunities and signing bonuses, are often part of the deal. HCA, for instance, offers a $1,500 bonus for a one-year commitment and $3,000 for two years.

Quality leadership also helps. "Leadership definitely attracted me to the job," said registered nurse Adam Schwer who moved to Virginia to work as a critical-care nurse at Bon Secours' St. Francis Medical Center after a hospital where he worked in New York began laying off nurses.

The Top 50 private area employers added the equivalent of 2,540 full-time workers, or 2.3 percent.

In all, 31 companies reported that they added employees between Jan. 1, 2007 and Jan. 1, 2008.

Northrop Grumman made it on the list for the first time, placing No. 33, thanks to a contract with the state to maintain computer and communications systems from a site in southeastern Chesterfield County.

Seventeen companies or firms -- six of them financial services -- reported a drop in the number of employees in 2008 compared with the prior year.

For instance, despite a new research center, Philip Morris USA also lost employees, starting the year with 7.7 percent fewer workers. A smaller, declining cigarette market has limited the company from replacing workers who left for other work or because of retirement, a spokesman said.

Four companies -- Northrop Grumman, Southern States, Performance Food Group and YMCA of Greater Richmond -- are new to this year's list.

Contact Emily C. Dooley at (804) 649-6016 or edooley@timesdispatch.com.

Read the original article.

Beth Mirza, senior editor of HR News Magazine quoted me in her article, Virginia Workforce Development Summit Highlights Best Practices:

Best Practices

Virginia SHRM chapters and government, education and business leaders shared their successes and lessons learned in workforce development. Christine Chmura, an economist heading Chmura Economics & Analytics, presented information gained from mining data on how each region of the state was spending money on training and comparing that to what jobs were needed and demanded.

Students, businesses and government “need information to select careers that are in demand in the regions where we want to live,” Chmura said. “The industry mix is constantly changing. Whether there is a shortage or a surplus of workers, both are bad, if there are too few or too many workers for specific jobs.”

For example, in one region of the state, she found that 115 students were training to become licensed practical nurses (LPNs), but there was demand for only 13 LPNs. What the area really needed were registered nurses (RNs). That region could consider creating a “bridge” between LPN and RN training, Chmura said.

“The question is, how do we solve the information gap? Because it is driving the skills gap,” she said. 

New study shows region got $1.84 billion from visits in 2006
In a story on tourism in Richmond, Emily Dooley of the Richmond Times-Dispatch writes:

Visitors to the Richmond region doled out about $1.84 billion in 2006 and spent enough time in bars, restaurants, theaters and shopping malls to support 25,990 jobs, a new study shows.

Those same travelers paid $454 million in federal, state and local taxes, saving households in the Richmond area $585 in taxes in 2006, the latest year figures are available, according to a study released this week by the Richmond Metropolitan Convention & Visitors Bureau.

Tourism activity in the city of Richmond and the counties of Chesterfield, Hanover, Henrico and New Kent were included in the survey. Betting proceeds from Colonial Downs in New Kent were not.

The convention bureau commissioned the $20,000 study to determine the economic impact tourism had on the area. It also wanted to know where tourism money was being spent and what it meant for local taxes.

But Christine Chmura, president of Chmura Economics & Analytics in Richmond, said the economic impact of tourism is difficult to figure "because people often have more than one reason to visit an area, and also, there are few establishments that you can identify as tourism-only," she said.

The amount of money spent on food and beverages -- $494.6 million -- topped the survey list.

Read the full story.

Emily Dooley of the Richmond Times-Dispatch writes:

The work week increased in the manufacturing sector, where production workers averaged 4 hours of overtime each week. That is 2.9 hours more than during the same period last year and the longest work week since the state began gathering work-week numbers in the early 1950s, Mezger said.

The extra hours may indicate that production companies are getting more orders for work and using existing employees to fill that demand. "Usually the long work week is a sign of the economy improving," Mezger said.

Fears of a slowing economy may also be a contributor.

"The fact that hours are up is good news, but there may be an underlying current that is negative," said Christine Chmura, president and chief economist with Chmura Economics & Analytics. "It could be that manufacturers are holding back from hiring new workers because they are concerned about future growth in the economy."

Read the full story.

Fairfax Office Closing as Jobless Claims Rise; Work Goes to Alexandria, Woodbridge
Alejandro Lazo, staff writer for the Washington Post writes:

The Virginia agency charged with processing unemployment claims is retrenching just as workers are beginning to feel the pinch of the economic slowdown.

The Virginia Employment Commission said yesterday that it plans to close its Fairfax office and relocate 45 positions in offices around the state to save an estimated $1 million on building and operating costs.

The announcement comes after the commission last month eliminated 243 staff positions, which included laying off 157 workers.

The cuts and relocations come at a time when economists say Virginia's unemployment rate is likely to increase as the U.S. economy weathers a downturn that is spreading beyond the housing market.

"Like the rest of the nation, the Virginia unemployment rate will inch up and employment growth will slow significantly from 2007," said Christine Chmura, chief economist for Chmura Economics & Analytics in Richmond. "With the overall U.S. economy slowing, the cuts in the Virginia state government are not coming at a good time."

Read the rest of the article: Va. Employment Commission Cuts Back

Three local analysts assess the downturn and what may be next
Sunday, March 23, 2008.

Some excerpts from a Richmond Times-Dispatch web chart regarding the local economy in which I asked to participant:

Bear Stearns has a near-collapse. The markets fall. The Federal Reserve lowers interest rates. Recession looms -- or is it already here?

The turmoil in the economy has become an almost daily topic. On Friday, the Richmond Times-Dispatch conducted a Web chat about the economy with questions from online participants and readers.

J. Alfred Broaddus Jr., former president of the Federal Reserve Bank of Richmond; Christine Chmura, president of Chmura Economics & Analytics; and Steve Marascia, a research analyst at the Anderson & Strudwick Inc. investment firm in Richmond, answered questions.

By CHRISTINE CHMURA
TIMES-DISPATCH GUEST COLUMNIST

Stock prices continue to fall and economic reports remain negative. Are we in a recession yet?

Last month's column reviewed how the National Bureau of Economic Research, the official arbiter of recession, defines a recession. Since it identifies the month in which a recession begins and ends, the bureau uses data in addition to real gross domestic product, which is released quarterly.

Specifically, the bureau looks for evidence that the decline is broad-based across more than a couple of months. Some examples are monthly indicators on employment, real income, industrial production and retail sales. So what do these indicators show? Is the nation in recession? To some, it sure feels like it.

I have another quote in the Richmond Times-Dispatch article by John Reid Blackwell: Defense is the key - Va., Richmond-region companies stand tall in supplying military.

Defense suppliers, large and small, can protect Virginia and the Richmond area from the worst effects of an economic downturn, said Christine Chmura of Chmura Economics & Analytics.

Defense contracts are not typically tied to the ups and downs of the business cycle, she said. "So typically, when the economy goes into recession, it does not have an impact on defense contracts. That tends to add stability to the regional economy

In Effects of housing slump spread - Furniture, auto sales fall, and home improvement stalls amid uncertainty, Carol Hazard of the Richmond Times-Dispatch writes:

Housing has been declining in the U.S. -- and the Richmond area -- since January 2006, said Christine Chmura of Chmura Economics & Analytics. She said she expects a recovery later this year or in early 2009.

The decline has been steeper and longer in other areas, such as the Washington area.

The housing industry started to recover last year, then the subprime crisis hit midyear, setting the industry back again, Chmura said. Borrowers defaulted on risky loans, credit dried up and even people with good credit had more trouble getting loans.

By CHRISTINE CHMURA
TIMES-DISPATCH COLUMNIST

Richmond.com has coverage of a presentation I gave to the Home Building Association of Richmond last week:

It was left to Dr. Chris Chmura of Chmura Economics and Analytics to put the numbers to slumping real estate sales: at the current rate of sales, Chesterfield has almost a 16-month supply of new single-family homes on the market, slightly more than Henrico County, but slightly less than Richmond or Hanover County. A very healthy market is a four-month supply of homes.

"The nation's been in a residential recession for the past year or so," she said. "2008 will be slower than 2007… homes sales are at the 2001 sales level." But she predicted a recovery late this year or early next year.

One of her many charts predicted there would be 454 new single-family home sales this month in metro Richmond compared to 690 last February. (To see Chmura's entire presentation, go to www.chesterfieldobserver. com and click on "special.")

For builders, she recommended diversifying this year into the remodeling business, which continues to grow nationally. For existing lots, Chmura urged building less expensive homes and suggested builders "weigh price cuts against opportunity costs" for those homes already waiting for buyers.

Theithacajournal.com has covered our recent study in Tompkins County, New York in an article: Expert: County's workforce educated, underemployed. Tim Ashmore writes:

ITHACA — A shortage of basic-skill workers in Tompkins County, and the six surrounding counties that make up the county labor market, means a higher rate of underemployment throughout the county, a consultant for Tompkins County Area Development said.

The analysis is the first step in understanding the make-up of the county's workforce, which will enable TCAD to develop a strategy to more efficiently match available labor with jobs.

Forbes Magazine recently named Ithaca the third most intelligent city in the United States, as roughly half the population holds a bachelor's degree or higher. Chris Chmura, president and chief economist for Chmura Economics and Analytics, said that in 2006, 18.5 percent of the high-skill workforce was underemployed due to the lack of high-skill, high-paying jobs. High-skilled workers are classified as workers with a bachelor's degree or higher; they make up just over 40 percent of the Tompkins County workforce.

Statewide, 30 percent of the workforce was considered high-skilled in 2006, but the percentage of underemployed workers was less than half of Tompkins County's at 9 percent. Nationally, more than 25 percent of the workforce was in 2006 high-skilled and 7 percent are underemployed.

Adjusted gross income comparisons between workers moving in and then moving out of Tompkins County showed that, over an 11-year period from 1996 to 2006, residents leaving the county took jobs that pay on average $7,000 more than Tompkins County jobs.

That puts the county average closer to the comparison for all of New York, where laborers make nearly $8,000 a year more after leaving the state.

In the Tompkins County Labor Market — which includes Cayuga, Chemung, Cortland, Tioga, Tompkins, Schuyler and Seneca counties — workers make less than $2,000 per year more after leaving the region.

Chmura said that a salary increase for graduate students leaving the county, as well as a lack of high-wage opportunities, may play a part in that statistic. Only 1 percent of jobs in the county offer annual salaries higher than $95,000, while the national average for jobs offering salaries greater than $95,000 is 4 percent.

Tompkins' unemployment rate is the lowest in the state, according to the New York State Labor Department Web site. The county closed 2007 with 3.1 percent unemployment, which can be attributed to the high percentage of high-skilled workers who have greater job flexibility, and faster job market growth than workforce growth, Chmura said.

In the next 10 years, Chmura expects Tompkins County to have 16,087 jobs to fill while the emerging workforce of the next 10 years is expected to be only 14,980.

In the seven-county region that makes up the Tompkins Labor Market, Chmura said the emerging workforce in the next 10 years will be 57,300 people to fill 48,270 jobs.

The consistently low unemployment rate in Tompkins County is frustrating to businesses looking for employees.

A survey of employers in Tompkins County administered by Chmura found the biggest complaint to be the lack of basic-skill workers, who make up just a quarter of Tompkins County's workforce. That's just more than half the national statistic at 44 percent. The demand for basic-skill labor in the county is 50 percent of all job market demand.

The greatest workforce supply shortfalls appear in service-related or food-preparation jobs, healthcare support and personal-care and service-occupation jobs.

One potential reason listed by Chmura for the lack of basic-skill labor in the county is the lack of affordable housing options.

TCAD plans to establish a strategic planning committee this month that plans to examine Tompkins County's workforce.

Here is an article from the Richmond Times Dispatch written by Carol Hazard: 'Another slow year' seen for housing – Richmond analyst expects industry will recovery by early'09. I have several quotes in this article:

The housing industry has been in a recession for the past year and it's pulling down the rest of the economy.

When will it turn? Not any time soon, said Christine Chmura of Chmura Economics & Analytics of Richmond.

"The bottom line is it will be another slow year like last year," Chmura said at the annual meeting yesterday of the Home Building Association of Richmond at the Holiday Inn Select in Chesterfield County. The topic was "Surviving Today's Market." About 500 people attended.

Chmura said she expects a housing recovery late this year or in early 2009. In the Richmond area, "inventory is up by 30 percent and sales are off by 35 percent from February a year ago."

It would take 17 months to sell all the houses on the market at the current sales rate, Chmura said. A year ago, there was an 8.8-month supply of houses on the market.

A 4-month supply is considered healthy, she said.

Christina Rogers at The Roanoke Times quoted me in her article Roanoke hopes to reap research rewards - A joint project between Virginia Tech and Carilion Clinic is expected to have quite an economic impact. From the article:

If all the 150 research positions are filled, the institute will triple the number of scientific research workers in the city, said Christine Chmura, a Richmond-based economist and founder of Chmura Economics & Analytics.

Right now, only 51 people working in Roanoke are described as providing scientific research and development, Chmura said. The average salary for this work in the area is $56,800 while the state average is closer to $89,000, she said.

"Any time you bring in a firm that pays wages higher than the average for the region, it is good news. It tends to lift the living standards in the area. It tends to provide demand for services," Chmura said.

A costly endeavor that few undertake.

The still-unnamed institute may also draw other companies, such as suppliers, to the city, Chmura said. "So that could add to a positive ripple effect to this expansion," she said.

By CHRISTINE CHMURA
TIMES-DISPATCH COLUMNIST

Forecasting the economy is a tough job.

Forecasters have to communicate confidence in their interpretation of the data, evidence and models.

At the same time, they need to continually test their hypothesis and remain open to change.

The evidence is pointing me to change. Although the subprime mortgage problems became very visible in September, it was not until December that the national economy showed significant signs of broader strains.

Consumer confidence as measured by the Conference Board has been falling since July, but consumer spending didn't suffer much. In fact, it grew 1.1 percent in November -- a two-year high -- and surprised everyone.

Carol Hazard at the Richmond Times Dispatch recently quoted me in her article, Housing downturn drags on – U.S. construction plunged in '07; local builders still hopeful. Here is an excerpt:

Christine Chmura of Chmura Economics & Analytics in Richmond said she expects construction starts in the country, state and or region to continue to fall this year.

"Given the continued slowing in the economy, I don't expect a turnaround until early 2009."

In the Richmond metro area, building permits for single-family houses are down 42 percent since peaking in January 2007, she said. By comparison, in the 1990 recession, permits in the Richmond area fell 40 percent.

"A similar trend is occurring in the state, where permits are down 49 percent from their peak, compared with a 52 percent decline in the 1990 recession," Chmura said.

Here is an excerpt from another Richmond Times Dispatch article in which I am quoted, Virginia foreclosures rising:

By comparison, 1.69 percent of all loans in the U.S. were in foreclosure, up from 1.05 percent a year ago.

"The rapid rise in Virginia is disconcerting," said Christine Chmura of Chmura Economics & Analytics in Richmond.

"But it is inconsistent with other indicators," she said. "Virginia is the 16th-fastest in employment growth in the nation. It has one of the lowest unemployment rates in the nation."

Foreclosures are more prevalent in areas such as Northern Virginia, where prices rose quickly, and outlying areas, where people moved into larger houses and took out risky loans, Chmura said.

"The housing industry is clearly in a recession. But other positive factors have offset the slowdown."

Consumer spending is up 5 percent from a year ago. Exports are up 14 percent. Industrial output has grown 2 percent. And information technology is up 20 percent.

"There is no recession in our forecast, although clearly there is more uncertainty due to the housing issue," Chmura said.

I have several quotes in Carol Hazard’s article, When will market here turn? An expert from the article:

"We expect the housing market to bottom out in the third quarter in 2008 and start to recover from there," said Christine Chmura of Chmura Economics & Analytics in Richmond.

"But we are optimistic. Many economists don't see the recovery until the first quarter of 2009."

The Richmond area has fared better than other areas of the country because the median-priced home -- with half selling for more and half for less -- is more affordable, she said.

"We don't have the booms and busts here," she said.

In the Richmond area, 43.7 percent of all households could afford a median-priced home of $206,113 at the end of the third quarter, Chmura said.

By comparison, 41.9 percent of all households in the country could afford a U.S. median-priced home of $180,970, and only 23.5 percent in the Washington and Northern Virginia area could afford a $446,423 home.

The only way to improve affordability is for incomes to rise, interest rates to fall and housing values to decline -- or some combination therein, Chmura said.

"Housing permits in the state have declined 46 percent from the peak in August 2005, according to Chmura Economics & Analytics. In the Richmond area, they have dropped 34 percent from the peak here in January 2006. In Northern Virginia, permits are down 58 percent from the peak in December 2004."

The RTD referenced me several times in the December 16th, 2007 RTD article, The merger shuffle. From the article:

"The Richmond area can absorb the lost jobs but not without some pain, said Christine Chmura of Chmura Economics & Analytics in Richmond.

'The loss of 2,000 jobs will slow Richmond's economy but not derail it,' she said.

The finance, insurance and real estate sector is strong here, adding 3,000 jobs in the Richmond area this year, she said"

I wish I would have helped the reporter (and audience) further by contrasting our diverse economy in Richmond to a textile downsizing in Danville. When the textile layoffs occurred, not only did the worker have few other alternatives firms to apply to but the skills of textile workers such as "sewing machine setters" are not easily transferable to other industries outside of textiles and apparel.

By CHRISTINE CHMURA
TIMES-DISPATCH COLUMNIST

Last week's cut in the federal funds rate target was great news for borrowers, wasn't it?

Actually, the federal funds rate is the only interest rate the Federal Reserve can directly change.

A change in that rate, however, typically ripples through to other rates. When the federal funds rate is lower, financial institutions are able to reduce lending rates on short-term loans such as automobiles because of their lower cost of funds.

The next logical conclusion is that the lower federal funds rate will help homeowners who have adjustable-rate mortgages.

That depends. An ARM is made up of the index, which is usually a particular interest rate, and the margin that the lender adds.

Jim Bacon recently covered the Virginia High-Tech Scorecard on his blog. This is a quarterly report that we create for the Center of Innovative Technology (CIT).

The high-tech scorecard offers quarterly data and discussion on the state of high-technology industries in Virginia.

Listening to the news, you would think that so many consumers are foreclosing on their homes that the majority of households won't be able to afford to put up a Christmas tree. But early results from Black Friday suggest consumers are alive and well.

And no surprise. According to the latest data from the Federal Reserve Board, household wealth increased in the 2nd quarter of 2007.

During that same quarter, subprime loans accounted for less than 7% of all mortgages, but 38% of all foreclosures. That's higher than 1st quarter 2001 when subprime mortgages accounted for 1% of mortgages and 5.7% of all foreclosures…but still not enough to shut the economy down.

Even if we assume that all 450,000 of the subprime ARMS that reset each quarter go pastdue (this is a worst case scenario), then subprime mortgages would account for 52% of all foreclosures but less than 5% of mortgages. Interestingly, subprime mortgages are dropping as a percentage of total mortgages because banks and other institutions have pulled back on offering those loans.

Is that enough to pull the economy into recession?