Chris Chmura was quoted in a recent Richmond Times-Dispatch article:

"People who can't find jobs are just not looking any more, so the numbers are more positive than the reality," said Christine Chmura of Chmura Economics & Analytics in Richmond.

When discouraged workers are included, along with those working part time because they can't find full-time work, the "underemployment" rate rose to 16.8 percent last month from 16.5 percent. The figure is below October's all-time high of 17.4 percent.

Chmura said she expects to see employment gains in the next couple of months, driven in part by the hiring of census workers in low-paying, part-time work. The government expects to hire 1 million temporary census workers this year.

Some economists said data suggest the job market is now pointed in the right direction and that the jobless rate may have peaked.

Still, hiring is likely to be weak.

Read more

Philip Newswanger of Inside Business cites a recent article by Chris Chmura:

"The government's bill doesn't require that an individual look for work or be available for work," Agricola said.

"When you take those features out of it, you get into entitlement programs and shouldn't be covered by unemployment insurance. It's a philosophical difference and a monetary difference."

Unemployed workers in Virginia get 26 weeks of benefits, but this can be extended to 86 weeks for individuals who qualify.

There's been some economic research on those re-entering the job market and their length on unemployment, Agricola said. He's referring to an essay by Christine Chmura, president and chief economist at Chmura Economics and Analytics in Richmond, in which she says that studies show that unemployment insurance lengthens the duration of unemployment.

A 1990 study by Bruce D. Meyer, for example, showed that a job-seeking worker's chance of finding a job improves dramatically the week his benefits run out, Chmura said.

"There's some concern that if you can structure your program in such a way, it would act as a disincentive to return to work," Agricola said.

Click here to read more from Inside Business

Read the essay by Chris Chmura mentioned in this article: Is it time for another extension of unemployment benefits?

Chris Chmura was quoted in a recent article by David Ress:

The effect of two snowy weekends in a row was big, said Christine Chmura, president and chief economist at Richmond-based Chmura Economics and Analytics.

"When people can't get out and spend, that's going to have a noticeable impact on the economy," she said.

Still, several store managers across the region told Richmond Fed officials that they were more optimistic than they had been about 2010, adding that raises and bonuses were on the table again after last year's freezes.

The Richmond Fed reported that investment advisers and other financial services professionals were doing more business.

Read the full article

CHRISTINE CHMURA TIMES-DISPATCH COLUMNIST
Published: March 1, 2010

Virginia fared pretty well during the recession compared with other states.

The commonwealth was ranked fifth in December 2009 with a 1.5 percent decline in employment over the previous year, equating to a loss of 54,700 jobs.

Wyoming performed the worst in the nation with a 6.8 percent decline in employment over the same period. Not far behind: Nevada with a 6.6 percent drop.

Employment growth was evident only in the District of Columbia -- up 0.9 percent over the previous year. Some might speculate that the stimulus funds are benefiting the nation's capital more than other regions.

Although Virginia's 1.5 percent decline in jobs is much better than the national 3.1 percent drop over the year ending with December 2009, it reflects the average across all counties and cities, which masks the undercurrents in the state's regional economies.

Lynchburg and Harrisonburg were the only two metropolitan areas in the state that grew on a year-over-year basis. Of the nine remaining metro areas, Northern Virginia was closest to turning positive with only a 0.1 percent drop from the previous year.

Bristol had the largest percentage decline at 3.2 percent, and Richmond showed the largest number of jobs lost with a contraction of 5,029 compared with the prior year.

The best source of county and city data is dated but points out even more clearly how the averages can be misleading.

For the year ending with the second quarter of 2009, Surry County was the fastest-growing locality in the state, followed by Prince George County. Both grew more than 6 percent, and together they added about 850 jobs to the state economy over the year.

However, Arlington County produced the largest number of jobs: 3,005 over the year ending with the second quarter of 2009.

At the other extreme, Pulaski saw the greatest percentage decline over the same period, followed by Bath County. Employment declined nearly 14 percent over the year in both counties for a total loss of 2,200 jobs. The largest job loss, however, was 17,683 in Fairfax County.

Employment in the state contracted 3.0 percent for the year ending with the second quarter of 2009 with 61 counties or cities growing faster than the average and 73 growing slower.

During this period when most of the state and country were shedding jobs, 11 of Virginia's counties and cities were expanding.

Viewing employment growth from this level of detail shows the need to go deeper than the average in assessing the overall health of the state.

Remember the adage: "With one foot in a bucket of ice water and one foot in a bucket of boiling water, you are, on the average, comfortable."

Christine Chmura is president and chief economist at Chmura Economics & Analytics.

Chris Chmura is quoted in a recent article by Emily C Dooley:

Base's growth brought jobs, will bring more Deep into the recession, Dave Martin still had plenty of work.

His company, Hall Brothers Electrical Contractor Inc., won four subcontractor contracts working on expansion projects at Fort Lee.

The first contracts started in June 2007 and the firm at times employed as many as 100 people to handle the work.

It was stimulus for the region before stimulus became a widely known term.

"For us, in the construction industry, it's been a lifesaver," said Martin, a senior project manager for the Colonial Heights electrical contractor. "We had to hire. We had some of our best years we ever had."

The Fort Lee expansion, which came about as part of the 2005 Base Realignment and Closure plan, is doing more than just turning the Army base into the home for eight military agencies and schools from across the country.

The project is one of the largest BRAC expansions in the nation and money spent on construction by local employees and visiting soldiers is translating into major economic benefits for the area.

"We would certainly be in much worse shape in this recession had it not been for the BRAC expansion in this region," said Joanne Tompkins, director of procurement assistance for the Crater Procurement Assistance Center.

Of the $1.9 billion in BRAC construction contracts expected to be awarded, $1 billion has already been paid. While local contractors may not be primary contract holders, they are getting subcontracts, she said.

For the Logistics University, 52 subcontractors were used and, of those, 29 were from the Richmond/Tri-Cities region. The Sustainment Center of Excellence also used local subcontractors. Of the 97 subcontractors, 44 were from the Richmond and Tri-Cities region, according to Tompkins.

Thirty-two contracts, from building a $14.5 million Air Force and Navy culinary school to nearly $90 million for barracks, have been awarded. Six of those have been completed. Three more are expected to be awarded and all construction must end by September 2011, when the base will be at full force.

The Army Ordnance School, Army Logistics University, Soldier Support Center and a Tactical Service Equipment Depot have already opened, Fort Lee spokesman Matthew Montgomery said. While construction was an economic force previously, the addition of personnel will be felt this year and next.

By the time the expansion ends, the daily Fort Lee population is expected to reach 46,740 people, up from 17,740 people in 2004, the year before BRAC was announced. All those people -- military, civilian, contractor, students and family members -- require services.

"It's a substantial expansion of Fort Lee and that should create a lot of other employment to serve that population in the Petersburg-Hopewell area," William F. Mezger said last year before retiring as chief economist for the Virginia Employment Commission.

"With that increase in personnel at the base, you also will need more housing and more development there."

Prior to the expansion, Fort Lee had a $700 million impact on the local economy. When completed, the annual impact is projected to be $1.2 billion, said Renee Chapline, executive director of Virginia's Gateway Region, the economic development organization for the Tri-Cities and several neighboring counties.

State and local governments should also benefit.

In 2006, before the expansion gained momentum, Fort Lee operations generated about $53 million in state and local taxes. Between 2007 and 2013, the base is expected to generate nearly $580 million in state and local taxes, according to an economic impact analysis prepared by the Virginia Employment Commission.

"We kind of view Fort Lee from the standpoint of a new industry coming to town, because it's essentially the same thing," said Dennis Morris, executive director of the Crater District Planning Commission.

An estimated 1,150 construction workers are expected to be on base each day working on BRAC projects, according to a fact sheet provided by Tompkins' office. Residents have already noticed increases in traffic near the base and surrounding communities.

"The local businesses profit from that -- the grocery stores, the hairstylists," she said.

The Army Logistics University, which opened in 2009 with 1,000 students, is expected to grow to 2,450 students in 2011, creating a need for 480,000 room-nights a year, according to a 2010 report about the market and fiscal impact of temporary living quarters prepared for the Crater Planning District Commission. Not all will be housed on base.

"It means you have a lot of new folks coming in and spending money," Chapline said.

Within the Fort Lee region, which the report said includes the cities of Petersburg, Colonial Heights and Hopewell plus the counties of Dinwiddie, Prince George and Chesterfield, are 57 hotels and motels offering 5,100 rooms. Another 14 hotels are in development and, if approved, would add 1,123 more rooms to the area.

"If [the expansion] had not happened, I think we certainty wouldn't be seeing the accelerated growth that we are seeing," Chapline said.

The area is not immune to the recession and unemployment.

The Richmond metro area unemployment rate, which includes the Tri-Cities region, stood at 7.8 percent in December, up from 5.6 a year earlier. Petersburg and Hopewell have traditionally had higher unemployment rates. In December, for instance, Petersburg's was 13.5 percent and Hopewell hit 10.3 percent. But that only counts civilian unemployment.

If you factored military employment into the population, however, the rate would go down, said Christine Chmura, president and chief economist at Chmura Economics & Analytics.

But Mezger said the expansion likely knocks about one or two percentage points off the unemployment rates in Hopewell and Petersburg.

"If it weren't for the Fort Lee expansion, the economy would not be doing as well," Chmura said.

And Morris said many civilians whose jobs are relocated to Fort Lee as part of the expansion may not choose to move, which could open up positions for local workers.

"I think what we're going to see is lower-wage civilian employees probably are not going to pull up roots and make a move to Fort Lee and then Fort Lee will be able to look to our civilian labor force to fill those positions," he said.

The chance for more expansion is also possible because of stationing actions, which ramp up personnel, at the base and as the Department of Defense looks at relocating agencies, Morris said.

"Fort Lee, I think, will continue to grow above and beyond the BRAC process," he said.

Martin, with Hall Brothers Electrical, says his firm, like many others, is focused on future work.

Business was good until last fall when Fort Lee contracts started to dry up and increased competition -- from firms as far away as Alaska -- took a toll.

"It's going to be a tough year, but there's work out there," he said.

David Ress writes:

It was a rough year.

Some pillars of the Richmond region's economy collapsed in 2009. Thousands of people lost jobs. Businesses big and small shrank.

But now that the regional economy is just starting to recover, it's also clear that businesses made changes that will affect the way the community looks, works, does business and plays for years to come.

There's a new corporate headquarters by the river, now that MeadWestvaco has moved into its $100 million tower next to the Federal Reserve Building. There is a large new locally owned bank with the merger of First Market and Union banks. A quirky local grocery chain will at last open on Sundays, now that an international giant has bought it. Richmonders will root for a new baseball team and are already going to concerts and plays in a new performing-arts center.

The main drivers of the local economy -- state and local government, tobacco and finance -- drove with less force than usual last year, and no one's looking for a dramatic bounce in 2010.

But new drivers -- overseas companies, higher education and health care -- are emerging.

"We have 144 foreign-owned companies employing 13,000 people. . . . We have something like 60,000 students, that's like the size of the University of Texas. HCA, VCU Health and Bon Secours are among our biggest employers, we've got expansion at Fort Lee," said Greater Richmond Partnership President Gregory Wingfield.

"The complexion of the economy is changing."

State and local governments, which made almost unprecedented large layoffs last year, remain under financial pressure as a sluggish economy bites deep into salesand property-tax collections.

Philip Morris USA's consolidation of all its cigarette manufacturing in South Richmond last year, along with the move here of the headquarters of sister companies U.S. Smokeless Tobacco and John Middleton Co., made Richmond the most important tobacco center in the nation. But smoking remains on a long-term slide.

The economic motor that really stalled over the past couple of years was finance.

"The slump of'08-09 . . . hit the finance, insurance and real estate industries harder than in the past," said Christine Chmura, president and chief economist of Chmura Economics & Analytics.

"The concentration of finance jobs in the region resulted in Richmond seeing a larger job loss than in past recessions."

The recession started with the bursting of the housing bubble -- mostly elsewhere, such as the once white-hot California, Florida and Nevada markets, but still touching the Richmond area as well, as sagging local government tax collections show.

The shock wave from the bubble's bursting rippled through the nation's banks and financial institutions, eventually causing a freeze-up in the nation's wholesale money markets. That freeze took down Henrico County-based insurance and real estate services firm LandAmerica. But the pain didn't stop when it closed its doors. More than a quarter of the employees who transferred to the Florida insurer that took over its main insurance operations lost their jobs in the spring.

One of the world's biggest insurers, Henrico-based Genworth Financial Inc., laid off 400 people as it moved to tighten its belt and boost its capital in response to the credit-market meltdown.

Circuit City Stores, which was once one of the Richmond area's largest employers with 1,900 full-time-equivalent jobs, struggled unsuccessfully with its debt. It closed its last store in March.

Semiconductor giant Qimonda, which had employed 2,500, shut down.

And even as MeadWestvaco worked on its new building, its worldwide cost-cutting program cost 75 headquarters jobs and saw the closing of its Louisa County carton plant with its 171 jobs. Kaiser Aluminum cut back at its Bellwood plant in Chesterfield County, eliminating 56 of about 125 jobs and closing the plant temporarily in July.

But developers also generated more than $1 billion of projects just in the city, with some $630 million worth completed during the year.

Besides MeadWestvaco's headquarters, there was the $110 million conversion of the former Miller & Rhoads department store building into a Hilton Garden Inn hotel and a 133-unit condominium complex. There were $110 million worth of new facilities at Virginia Commonwealth University's MCV campus, including the eight-story, $71.2 million Molecular Medicine Research building on the site of the former nursing education building

The $75 million CenterStage performing-arts center, backed by some of the area's most influential business leaders as a way to generate downtown convention business as well as improve the area's quality of life, opened its doors.

The suburbs also saw activity.

Hard-hit Henrico, home to LandAmerica, Circuit City and Qimonda, saw Bank of America launch a $150 million expansion of its operations center in Villa Park in northern Henrico, a move that added 50 jobs last year and will eventually create more than 125 positions.

British insurance giant Admiral Group Inc. decided to enter the U.S. auto insurance market from a base in Henrico, opening an office last year with 45 people and expecting its Elephant Insurance unit to grow by 100 positions by the end of this year. T-Mobile expanded its Henrico operation by adding a call center, with 250 jobs.

In Chesterfield, Sabra Dipping Co., a maker of kosher, vegetarian foods, expects to employ 260 people when it opens its plant by the middle of the year.

The local economic-development agency, the Greater Richmond Partnership, reported that during its fiscal year ended in June, new plants and expansions meant 1,200 jobs and $100 million of new investment.

Since then, noodle-maker Maruchen Virginia Inc. announced an $18 million, 50-job expansion, and Hill Phoenix Inc. a $9.3 million expansion of its refrigerated display manufacturing operation.

The partnership's latest survey of firms across the region found signs some are getting ready to hire: Of 165 contacted, 44 said they planned to hire a total of 200 people.

"We expect to see employment begin growing by the middle of 2010," Chmura said. "We should see much stronger growth in 2011 when the economy benefits more fully from the Fort Lee expansion and Rolls-Royce engine manufacturing plant."

Still, it isn't going to be the easiest year for everyone.

"From 1992 to 2007, it was a bull market; for a lot of us, that's the bulk of our business life," said Michael Byrne, owner of Richbrau Brewery Co. in Shockoe Slip. "With what we're having to do now it's, 'Wait a minute, now I know what my parents were talking about.'"

Byrne said he tracks what he's spending on 119 separate line items in his books. These days, he's going over all of them, all the time. At the same time, after a year that saw 30 restaurants close, he figures it's a buyers market these days, so the food he serves has to be better than ever.

"In the past, where if one plate in a hundred wasn't exactly what I wanted, that was OK," he said. "Now, nobody can afford that. Quality is everything . . .

"At the end, I think it will be a healthy place for businesses to be if they make it through."

Original Article

Emily C Dooley, Times-Dispatch Staff Writer writes:

When the recession took hold nationwide and in the Richmond area, the technology industry was not immune.

Layoffs and hiring freezes hit the sector.

Many of those cuts had an impact on information-technology departments at large corporations and employers.

That drop in employment was a plus to one segment of the tech industry -- established IT staffing and consulting companies.

They benefited from cuts at companies that then needed to outsource, the ability to offer temporary staffing to firms nervous to hire and the chance to pick up talent put out on the streets.

"We had the equivalent of four Fortune 500 companies go under in the span of 45 days," said Ed Gooding, president of The Merge Computer Group, an IT staffing firm in Henrico County. "The good news is that when I needed candidates for my company, I had no problem filling positions with good candidates."

At the beginning of 2009, Merge had 24 employees. By Dec. 31, there were 44. Gooding had four former clients return to him after cutting IT positions.

"I feel blessed," Gooding said. "We had a very successful year and I feel very, very lucky. I've got some good long-term relationships."

Computer system design and related services, management consulting services, and other scientific and consulting services all saw increases in Virginia and the Richmond region between the second quarter of 2008 and the second quarter of 2009.

In all cases, the increases were not as much as statewide numbers, but the change in employment was between 1.5 and 5.6 percent in a region hit with mass layoffs from Qimonda North America, Circuit City Stores Inc., LandAmerica Financial Group, Reynolds Packaging and others.

It's not unusual that temporary-staffing firms do better at the tail end of a downturn, said Christine Chmura, president and chief economist of Chmura Economics and Analytics.

"When the economy is starting to pick up but businesses aren't yet convinced that it will continue to accelerate, they prefer to hire temporary workers because they don't have a long-term commitment to them," she said.

While some companies lost contracts with big companies like Circuit City because of its bankruptcy, others picked up jobs after firms like Genworth and Altria laid off their IT workers and looked to outsource, Gooding said.

Richmond IT staffing and consulting firm CapTech, for instance, hired 50 people last year and has plans to hire 50 more. Health-care and financial services are two big focus areas for the firm, formerly known as CapTech Ventures.

One reason is the company is able to do the work of IT departments that were slashed during the recession. Another is that the firm is expanding an office in Washington.

"We were very focused last year on Washington," CEO Charles A. "Sandy" Williamson said. "We had to diversify out of Richmond."

Another reason for success? Companies are realizing the power of information.

"There is a lot of information to manage," Williamson said. "If you harness that info, there's a lot of ways to find success."

Peter Galuszka writes on styleweekly.com:

To get an idea of how loopy the debate over Barack Obama’s stimulus spending has become, consider the plight of Mike Vines.

Vines, co-owner of Escape Massage, a health spa in Short Pump, been approved for a $168,000 commercial bank loan backed by the U.S. Small Business Administration to open a new outlet in Midlothian’s Weschester Commons.

In December, Mark Steyn, a stand-in on arch conservative Rush Limbaugh’s radio talk show, targeted Vines’ project as an example of “the worst ways to spend stimulus money.” Steyn downgraded the state-licensed spa to a “massage parlor” on national radio, Vines says.

“It was totally out of context,” Vines says. “We never got stimulus money. A small portion of the SBA loan guarantee was backed by the stimulus. That’s all.” He adds that “we could never get through” to the show for a correction.

Indeed, just a year after the passage of the $787 billion American Recovery and Reinvestment Act, assessing just how well the stimulus has worked is a nearly impossible task. It is difficult to find out how much has actually been spent nationally and in Virginia. Web sites list expenditures but they are often at odds with what localities report. “It’s just too hard to track,” says economist Christine Chmura, head of Richmond-based Chmura Economics & Analytics.

Read the full article

By David Ress of the Richmond Times-Dispatch

For Richmond-area residents, it seems a full stomach, along with buying more booze, were how they coped with last year's slow economy, new sales-tax data show.

But consumers in the region tightened their belts hard last year when it came to big-ticket items such as appliances and furniture and to clothing compared with 2008, a Richmond Times-Dispatch analysis of state tax collection data found.

"People are still being really cautious about their spending," said Christine Chmura, president and chief economist at Chmura Economics and Analytics in Richmond.

The frugality among Richmond-area residents last year meant greater supermarket sales, likely because they tended to eat more often at home, Chmura said.

Grocery sales in the region rose 7 percent, while restaurant sales declined nearly 2 percent. In comparison, supermarket sales across Virginia jumped only 3 percent while restaurant sales increased nearly 0.5 percent.

Overall, taxable retail sales fell more sharply in Richmond and its three main suburban localities than in Virginia as a whole: dropping 7.4 percent in the Richmond area from 2008 to 2009 versus a 4.7 percent decline in the state, the latest figures show.

In 2009, the Richmond area was hit with the closings of several major businesses. In December, according to the Virginia Employment Commission, the unemployment rate in the Richmond region was 7.8 percent; for the state as a whole it was 6.7 percent.

Richmond-area consumers cut back even more sharply than the rest of the state on:

• Furniture/Home furnishings, down 25 percent compared with the year before. Statewide, the decline was 14 percent.
• Clothing, down 18 percent. Statewide, the decline was 10.5 percent. 
• Building and gardening supplies, down 14 percent. Statewide, the decline was 11 percent. 
• Appliances and electronics, down 13 percent. Statewide, those sales rose nearly 4 percent. 

Consumers were delaying buying expensive items such as appliances and cars, and seemed to be opting for less expensive brands when they did go shopping, Chmura said.

"When I've asked people at, for example, the ABC stores, what they say is that they aren't buying less alcohol, but they are shifting down their brand," she said.

The data from the Virginia Department of Taxation show that even if Virginians were buying cheaper brands, they were buying more alcohol. Statewide, sales at ABC stores last year rose 3 percent from the year before while sales in the city and three suburban localities rose 2 percent.

Tax department figures show it collected taxes from 242 fewer retail locations across Virginia last year. The region lost a net of 21 stores.

A net 250 fewer clothing stores operated across the state, and 43 in Richmond and its suburbs, the data show.

While people in the Richmond area tended to delay repairs to their cars, clocks and other possessions, in the end they opted for repairs rather than new purchases.

Taxable charges for repair services last year declined 2.5 percent in the area compared with 2008 levels, and 1 percent across the state. Both declines were well below the drops in purchases of new items.

Area consumers spent about 0.5 percent more on health and personal-care products, though Virginians generally tended to splash out more, with purchases up 4 percent.

CHRISTINE CHMURA TIMES-DISPATCH COLUMNIST

With the unemployment rate at 10 percent and expected to go higher, it would seem that Congress should again extend the length of time that unemployed workers can receive benefits.

If you take into account people who are working part time when they prefer a full time job, the discouragedworkers and others who are marginally attached to the work force, then the unemployment rate is really 17.3 percent in the nation.

With many firms still laying off workers, it's taking longer for the unemployed to find jobs. The average duration of unemployment was 29.1 weeks in December, according to the Department of Labor.

In Virginia, recipients of unemployment insurance are typically eligible for up to 26 weeks of benefits.

Last year, Congress passed a bill that included four federal extensions. If a person in Virginia qualifies for all four extensions, it is possible for him to receive 86 weeks of unemployment benefits. The expiration dates for these extensions vary, with the last extension for benefits expiring at the end of July.

Extending unemployment insurance seems like a good policy. But could it be contributing to the higher unemployment rate?

Studies show that unemployment insurance lengthens the duration of unemployment. A 1990 study by Bruce D. Meyer, for example, showed that a job-seeking worker's chance of finding a job improves dramatically the week his benefits run out.

It should not be too surprising that the job seeker becomes more motivated to find a job as that final unemployment check is looming.

Neither is it surprising that many studies have found that the amount of money received in unemployment insurance benefits affects the duration of unemployment.

That is, the higher the proportion of weekly earnings that are replaced by unemployment insurance benefits, the longer the length of unemployment.

States vary in the amount of unemployment insurance benefits they offer. However, all states have a minimum and maximum payment.

The minimum benefit typically provides a higher replacement ratio of wages for lower-paid workers than high-wage earners. Consequently, it motivates workers with lower wages, including younger workers who don't have much experience, to remain unemployed longer.

Unemployment rates reflect this phenomenon.

One study suggests that reducing the replacement ratio by 25 percent would reduce the average length of unemployment by three to four weeks.

So, the question remains, should politicians again extend the length of time that unemployed workers can receive unemployment insurance benefits?

Originally published in the Richmond Times-Dispatch