Long road ahead

The recession ended in 2009, but Virginians aren't buying it.

According to a new report released today by the Thomas Jefferson Institute for Public Policy, Virginia is faring slightly better than the nation, but recovery is still "slow and uneven" and encumbered by "headwinds."

"Officially, the recession is over, and it ended mid-2009. We've had seven quarters of real GDP growth, but it really doesn't feel like it's over to a lot of people," said Dr. Christine Chmura, the primary author of the study. "The reason why is the continued high unemployment rate and the sluggish employment growth."

Chmura said that although the nation has added 1.8 million jobs over the last year, the nation lost 8.7 million jobs during the recession. If employment continues to expand at the current rate, she said, "it will take us about four and a half years before we reach those pre-recession levels."

Last year, Virginia added 39,257 new jobs and employment expanded by 1.1 percent, compared to 1 percent across the nation. Most of those jobs were concentrated in business services, education, healthcare and retail.

Possible federal cutbacks to defense spending would especially hurt employment in northern Virginia and the Hampton Roads, where a significant portion of the economy relies on defense contracting.

The report projects nationally that real GDP will grow 2.7 percent this year, a little less than last year's 2.8 percent growth. Consumer spending is expected to grow about 3.9 percent nationwide this year, which compares favorably to last year's 1.7 percent growth. However, Chmura expects home construction and the housing market to "be a drag on overall economic growth."

One of the key indicators of the economy is the number of foreclosures across the state and the nation.

According to the report, one out of every 742 Virginia homes was foreclosed in March 2011. That's better than the national average, one foreclosure in every 542 homes, but still not ideal because the foreclosures aren't spread out. Instead, the report said, 87 percent of the foreclosures are concentrated in areas where homes are least affordable: northern Virginia, Richmond and Hampton Roads. Chesterfield County had the highest foreclosure rate in the state this March, with one in every 283 homes facing foreclosure.

Home sales were also sluggish in 2010. The Virginia Association of Realtors reported nearly 83,000 homes sold across the state, a 9.8 percent decrease from 2009.

Another concerning indicator: most Virginia small business owners aren't optimistic about the future. According to Nicole Riley, the Virginia director for the National Federation of Independent Businesses (NFIB), optimism among small business owners has declined for the third straight month. One in four business owners said that weak sales were their top business problem in the NFIB survey, and only 5 percent thought it was a good time to expand.

"It definitely doesn't feel like there's much growth," Riley said, citing concerns about low consumer spending, higher taxes and uncertainty about federal regulations and healthcare legislation as factors that hinder business owners from expanding.

Additionally, she said that the declining housing market has made it harder for small business owners to get home equity loans to expand their businesses. Financial reform and bank crackdowns have made other lines of credit more difficult or even impossible to obtain.

Riley said she talked to one business owner with a perfect credit rating who went to his bank to try to expand his line of credit. Contrary to what he'd expected, "he had to prove why they shouldn't lower [his credit]," Riley said. "Options that were out there aren't out there any more."

Riley said that businesses are looking for more consumer spending, lower taxes and less stringent regulations. "Frankly, they're looking for government to just get out of the way," she said.