- Last Updated on Wednesday, 23 June 2010 05:00
- Published on Wednesday, 23 June 2010 05:00
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Governor Bob McDonnell’s office hasn’t been able to offer much good news when it comes to the state budget or the economy. However, that may be changing.
Of course, the Governor’s office is being cautious and isn’t saying much.
But as we wind down the fiscal year, which in the Commonwealth ends the last day of June, it looks like the state, in 2010, might actually have a surplus. Yes, you read that right, a surplus. And while we don’t know for sure just yet, the signs are promising. The state, to make ends meet, needs to collect $1.37 billion in June. That’s a lot of money, but last year, during the height of the recession, we managed $1.5 billion, and so a lot of the fiscal types in Richmond see a surplus as a distinct possibility.
Of course, don’t count on the surplus to be all that much, and it can always find a home, but it is a sure sign that Virginia’s economy is improving. That’s because much of the improvement has to do with a higher than expected revenue from sales tax receipts. In what was an unexpected surprise, sales tax revenues were up 6.5% in May with a 7.3% increase in April. This all helped Virginia’s revenue picture considerably, but most of all, it’s a strong indicator that the state’s economy is reviving.
However, a fair question, is “…does it mean we’re out of the recession?”
The answer to that is the classic economist’s response of “yes and no.” Consumer optimism is up, so is GDP, but sales growth and spending have been slow to catch up. Some would argue that Americans have become, thank goodness, more budget conscious, and might not be as easily lured back to their spending frenzy of the pre-recession years. Also, the real estate industry, though finally showing some signs of recovery, has taken quite awhile to clear out the short sales and the foreclosures.
Ah, but what about jobs?
That’s where things get a bit gloomy. This has been, what some have called, a “jobless” recovery. Of course, jobless might be a harsh word, but certainly there hasn’t been a robust growth in employment. Overall, in Virginia, the most recent unemployment rate was 7.2%. That’s high by Virginia standards, but it doesn’t tell the whole story.
Locally, in King George, the most recent unemployment rate is an uncomfortably high 9.1%. This compares with the 7.1% rate we had at this time last year. In Westmoreland, the unemployment rate is 9.5%, which though distressing, is actually down slightly from its 10% rate from this time last year.
While those numbers aren’t good, and reflect a poor showing when compared to counties up and down I-95, they’re not the worst in the state by any means. There are a surprisingly large number of Virginia counties and cities where the unemployment rate is above 10% and in a couple of cases hovering just shy of 15%. One of the hardest hit regions includes the counties and cities along the North Carolina border. These areas, which years ago, relied on the textile industry as their economic engine, have proven especially vulnerable during this recession.
Typically, following a recession, firms are slow to add new jobs. In this economy, they have either tried to squeeze more productivity out of a reduced number of employees or, taking a cautious view, hired temporary employees. They haven’t raced out to hire new people. In many cases, companies, and small business owners, not convinced the recession is over, have found this arrangement works just fine. They reduce their exposure, and can wait until they’re convinced sales and new orders have actually recovered. Right now, they’re just not sure.
Of course, none of this is particularly heartening if you’re out of work or are related to someone who is. To you, a recovery is a job and a paycheck and so far, the recovery hasn’t been strong enough, or sustained enough, to prompt a significant improvement in the jobs situation. Something that needs to happen if the recovery is really going to be a recovery.
You may reach David Kerr at