It’ll take at least three years before parts of the state economy fully recover, Old Dominion report says.
NORFOLK-Before the pandemic hit, Virginia had entered a sixth straight year of economic growth. It’s going to be a while before we see that again. Old Dominion University’s Strome College of Business put out a report on Monday, painting a clear picture of how long it’ll take Virginia’s economy to recover.
“While there continue to be signs of recovery, we cannot gloss over the simple fact that we are witnessing an economic, social and public health shock the likes of which has not been seen in the United States since the Great Depression,” the report states. “The Virginia economy will contract in 2020 and the pace of growth in 2021 depends, in part, on how quickly the country can inoculate wide swaths of the population.”
While Virginia’s businesses did much better than some in other states, the report warned that significant challenges remain. With that in mind, the report made it clear a full recovery won’t happen in 2021.
“Even with the positive news about the efficacy of COVID-19 vaccines, a complete economic recovery will likely take years, not months,” the report states.
Another report, done by Moody’s Analytics for the Virginia Chamber of Commerce this month, went into a bit more detail. The state’s cities and urban areas like Hampton Roads and NoVa should return to full employment by 2023. But the company paints a darker picture for Virginia’s rural areas. Those won’t see full employment again until at least 2025.
‘Little to No Effect’
That’s not to say things aren’t slightly improving. Officials at the ODU School of Business reached out to companies across the state. They asked business owners to describe how much of an impact the pandemic had on their operation right now. An estimated 30% of companies said COVID-19 continues to have a large negative impact on them. Another 40% said the pandemic has a moderate negative impact. Other companies had a different opinion.
“About 1 in 4 Virginia businesses indicated that the pandemic had little or no effect by mid-November,” the report said. “For those businesses that survived the initial wave of economic disruption, the economic environment appears to be improving over time.”
However, that improvement came at a price. By Dec. 1, 1 in 9 Virginia businesses said they laid off a number of employees this year. That’s one thing the ODU report warns of. We shouldn’t expect things to return to the way they were. In fact, it says, some industries will shift to entirely different business models.
“We must temper our expectations and accept that a recovery will be neither quick nor smooth,” the report said. “More critically, we must reimage what recovery will look like in a changed world.”
That means some restaurants won’t return to larger dine-in options. They’ll stay with take-out and outdoor venues. Retail may also see some changes as a result.
Politics Creates Problems for Economy
The big takeaway from ODU’s report is that politics stands in the way of a full recovery.
“In an era of increased political polarization, Virginians must set aside their differences for the Commonwealth to succeed in its goal of ensuring economic stability for all its citizens,” the report said.
Instead of working to improve and rebuild the Commonwealth post-pandemic, groups are focused on what they can do to campaign. The report laid out a number of ways state lawmakers could speed up the recovery.
“Our traditional recommendations continue to hold: invest wisely in K-12 education, improve access to broadband and other forms of infrastructure across the Commonwealth and reform the tax system to meet the needs of the new decade,” the report said. “In crisis, there is opportunity. Perhaps now we can agree to work on reducing these inequities in order to improve the lives of all who call the Commonwealth home.”