Economic Fallout of Sequestration
A renowned economist is relaxing her predictions somewhat about the effects of federal sequestration on Virginia and now sees a reason for some optimism. Chris Chmura says although the impact of the cuts will still hurt the Commonwealth more than most states, she expects there will be some modest job growth.
Chmura says sequestration will affect the state's defense contracts more than the non-defense sector, and the Northern Virginia and Lynchburg areas could be most at risk. Hampton Roads, which is also heavily reliant on government contracts, has seen a decrease in its dependence on them.
But she says overall employment should increase about one percent this year and more than one percent next year. She adds that although it's not easy to transition from being a defense consultant, areas with a highly educated workforce could rebound more easily from potential cuts.
"In some of the alternative markets that we're seeing right now---cyber security, unmanned vehicles, environmental issues--are areas that I think the private sector is able to transition to, which really helps the Virginia economy overall."
Chmura also says a revival of Virginia’s housing industry will help. The finance sector’s continuing recovery is particularly beneficial to the Richmond area. Finally, she also thinks that some skills of veterans and Department of Defense personnel could be re-purposed for high-demand IT or research jobs.