Virginia’s economy tends to be particularly resilient because of the massive presence of military and government contractors in the state, but the coronavirus is still taking a dramatic toll, economists from the Federal Reserve Bank in Richmond said Friday.
“The challenge is that the best way to stop the virus is to halt the things that drive our economy, so of course you’re not going to see things return to normal until we as consumers are confident that we can go out,” said economist Sonya Ravindranath Waddell, who leads the regional economics group at the Richmond Fed.
Even parts of the state with massive military presence, such as Northern Virginia and Hampton Roads, will suffer, she said — not because the military is going to have layoffs, but because big gatherings of people are exactly what must be avoided to fight the virus.
Virginia’s economy was roaring last month, with an unemployment rate of 2.6 percent, the lowest level since 2001, according to associate regional economist Joe Mengedoth.
The monthly jobs report from the federal Bureau of Labor Statistics, out this week, showed Virginia added more than 11,000 jobs in February. “But a lot has happened since then,” Mengedoth said in a conference call with reporters.
Last week alone, initial unemployment claims in Virginia topped 46,000 — about double the next highest level on record, in 1989, Mengedoth said. Even during the financial crisis of 2008 and 2009, the state’s weekly unemployment peaked at just under 22,000, he said.
Mengedoth and Waddell said it’s hard to say what the state’s unemployment rate could be this month — especially since federal data will probably not capture the pandemic’s full impact until sometime in May. In the meantime, researchers from the Fed are talking to businesses throughout Virginia for an anecdotal sense of the impact on businesses and workers. It’s not good.
“Waitresses, waiters, bartenders, restaurant workers … are filing unemployment, they’re being laid off. Many firms are struggling with how they’re going to survive over the next couple of weeks and months,” Waddell said.
Leisure and hospitality make up 10 percent of the state’s workforce. She said regulators are communicating regularly with community banks to make sure credit is flowing freely to help businesses stay afloat. Each business faces a complicated scenario, she said — worried about the health of customers and workforce, socked by lagging demand and problems in the supply chain, faced with the need to pay rent or mortgage and make payments on debt.
“I don’t think it’s a concern for today, it’s more of a concern for next week or the week after,” she said.