Old Dominion University has released its annual State of the Commonwealth report. And it shows that after a sluggish start to the decade, Virginia's economy is heading into a new one on a high note.
The team behind the report looked not only at Virginia’s economic performance in 2019, but also tried to trace how far the state has come over the last decade.
Bob McNab is director of ODU’s Dragas Center for Economic Analysis and Policy. He says the first half of the decade saw Virginia reeling from the Great Recession:
“The Commonwealth did not grow fast, it did not contract fast – it just kind of muddled through," McNab explains. "The second half of the decade, and especially more recently, what we’ve seen is an uptick in economic activity. And for the first time this decade we expect 2018 and 2019 to be the first years of growth greater than two percent.”
McNab expects that upward trend to continue into 2020 – but there are a few uncertainties that could negatively impact that growth. Things like changes in immigration policy and a continuing trade conflict with China.
Wise investments could help Virginia stem any adverse effects of decisions that are often outside of the state’s control.
“Invest in a skilled workforce," McNab stresses. "Two – broadband. It is the utility of the current century. It’s like electricity. It is the thing that will power commerce, power education.”
Putting money towards infrastructure is another wise investment – McNab says – that will continue to bolster Virginia’s economic growth into the first part of a new decade.
The report found that Northern Virginia wasn't the only driver of growth.
“We’ve actually seen upswings in economic activity, for example, in Blacksburg and Charlottesville – and also Washington D.C," he says. "In other words, some of the largest gaining areas in Virginia at the metro level have been some of the smaller metro areas in terms of consistent growth over time.”
On the other hand, Hampton Roads has sort of ebbed and flowed over the decade due to fluctuations in defense spending – a huge contributor to that portion of Virginia’s economy.
The report also looked into population trends – and rural Virginia continues to largely shrink compared to the state’s more urban areas.
In addition to delving into Virginia's overall economy, the State of the Commonwealth report also anaylzed the state's relationship with pot. Regardless of which party won control of the General Assembly this year, marijuana was likely to be a big topic of discussion in Richmond.
First things first, Old Dominion University’s State of the Commonwealth report looked into the current status of marijuana in Virginia. It found that 12% of Virginians say they used pot in the last year, and 7% in the last month. That’s relatively consistent among white and African-American populations.
What’s different is arrest data, African-Americans are more likely to be arrested for marijuana possession.
With that in mind, the report then looks into what would happen if Virginia decriminalized pot possession versus legalizing it entirely.
Bob McNab, who helped compile the report, says that in other states that have decriminalized, the racial disparities in arrests tended to continue. There’s another issue too:
“Just because you don’t face a criminal charge for possession of marijuana, you still have to go to somebody who is an illegal supplier. And that supply side of the market carries risk,” McNab explains.
On the other hand, legalization brings the entire market into a regulated state.
Overall usage of pot in states that have legalized hasn’t really changed, the report found, but they have experienced an increased number of car crashes and emergency room visits by teens:
“When you bring marijuana out of the black market into the grey market, and now people are now competing on price and quality," he says. "So the potency has increased dramatically in Colorado over the last five years, and the price has dropped about 50%.”
McNab also says the revenue generated from taxing marijuana in states that have legalized has so far been relatively modest.
The Virginia Retirement System is well managed and has seen significant improvements over the last five years.
That’s another major finding within the new report from Old Dominion University.
McNab believes the VRS has done well considering it often has to play with the hand the General Assembly deals it.
“What we’re arguing with the VRS is that maybe it’s time, we’ve got enough evidence to say let’s take a portion of your funds, put it more in market index funds," he says. "It’s lower cost, it’s about the same, if not higher, return, and it’s about the same amount of risk. So if I could say you’re going to improve your rate of return at lower cost and the same risk, that seems like a wise course of action.”
McNab says Virginia’s system compares well with those in states like Illinois and Connecticut that are woefully underfunded.
ODU's 2019 State of the Commonwealth Report delves into many more topics surrounding Virginia's economy in the past year, and over the last decade. You can find the full report here.