Economist: Lynchburg is growing more than official data suggests
See Full story at The News & Advance...The head of a Richmond-based economic research firm told Lynchburg business leaders recently that while nationally, a recession appears likely next year, Lynchburg in the meantime is seeing more growth than official data would suggest.
Chris Chmura, CEO and Chief Economist for Chmura Analytics — a quantitative research and economic development and workforce consulting firm located in Richmond — spoke Thursday at the Lynchburg Regional Business Alliance about what to expect for the 2023 year in terms of economics, workforce development and growth.
Chmura said inflation is high nationwide, and a recession is likely next year.
“The national economy has a big impact on what happens here in Lynchburg and everywhere across the nation,” she said.
Chmura said that during the COVID-19 recession, as most people were staying at home, prices were decreasing because no one was buying and the price of services stayed low, she said. Even as the country came out of the recession, the price of goods actually fell and then rose rather quickly.
“That’s because we couldn’t go to the gyms, we bought the Peloton, we did all those things, and that drove the price of goods up,” she said. “We had supply-chain issues and the price of goods again rose.”
Chmura said the Federal Reserve claimed inflation would be temporary and would come back down because once the supply-chain issues went away and people started spending on services again, inflation would decrease, but service prices continue to increase.
The Federal Reserve started to raise interest rates in March but it takes six to nine months for rate increases to impact the economy, she said.
The Federal Reserve has increased its benchmark rate six times this year, to a range of 3.75% to 4%, which is the highest it’s been in 15 years. Those moves have hiked mortgage rates, causing a drop in home sales along with higher costs for most consumer and business loans.
“So it wasn’t until September and October now that we’re finally seeing that impacting the economy. There are higher mortgage rates and people aren’t buying houses as much. So we would expect that the economy will continue to slow into next year, and that’s when we expect these higher rates that the Fed has given us to cause this economy to go into a recession,” she said.
She said the Lynchburg region is growing a little bit more slowly than the nation but Liberty University boosts much of that growth.
“You’re unique in this region in that you have a very large employer that’s not counted in the employment data and it makes a big difference in terms of the growth rate here,” she said.
In the Lynchburg region, employment growth is not accurately represented because Liberty University doesn’t have to participate in unemployment insurance since it’s a religious institution, she said.
“Because they don’t participate in unemployment insurance, we don’t see them in the [U.S. Bureau of Labor Statistics metropolitan statistical area] numbers that come out monthly,” she said. “So most organizations participate in the unemployment insurance, you have to pay unemployment insurance counting the people that work in your firm, and that’s where these numbers come from. So it’s pretty much 99% of the universe of all information.
“But Liberty has been really good about giving us this data so that we could add it so that when people look at the Lynchburg MSA, you’ll see what has really happened here.”
She said using the data from the BLS, it looks like Lynchburg has had lackluster growth over the decade prior to COVID-19, but when Liberty is added into the equation, it tells a different story.
“In fact, if we look at the growth rate, it doubles,” Chmura said. “So bottom line here is everyone knows having the data is very important in terms of making decisions and you all are having to make decisions on what people to hire and how fast the region is growing and can we expand here. And clearly, these numbers paint a much rosier picture than the official numbers that you get.”
Megan Lucas, CEO of the Alliance, said the area has a very diverse economy and is strong in manufacturing.
“And that helps us tell our story throughout the country and throughout the world,” she said. “We tell the story of manufacturing of jobs and employment investment in this region to everyone who will listen throughout the world.”
She talked about a report that came out of Old Dominion University last year, called the State of the Commonwealth Report, which painted an unfavorable picture of the Lynchburg region in terms of growth.
She said the report did not include any data from Liberty University, the area’s largest employer.
“And we felt that was obviously very unfortunate, and we thought it was unfortunate also, that they hung their hat on incomplete data, and probably will continue to hang their hat on incomplete data,” she said. “But thanks to Liberty University, and thanks to Chris Chmura and her and her team, we are working to get complete data into the systems so that when people look at our region, they get a real picture of the strengths and the assets of this region.”
Chmura said there is a tight labor market in Lynchburg and now more than ever, economic developers need to work with educators and workforce officials.
“I’m so glad that you have economic development, workforce and educators here all together because now more than ever, it’s really important that these groups and businesses all talk to each other about what are the jobs that are in demand, what do we need to be training students for so that when they graduate from high school or college, they’re able to go straight into the job market,” she said.
Nat Marshall, community engagement manager at BWX Technologies said he spends a lot of time in the schools and tries to find the best candidates for the company’s job openings.
“That’s why today’s agenda is so timely. Our economic outlook and our educational options and our future workforce are all critical,” he said. “And that connectedness on these subjects is the perfect illustration of why events like today’s summit are so important — the better we understand the trends that impact our region, the better we can prepare for challenges and opportunities.”