A look at the state of the Fredericksburg-area economy

Date published: 10/31/2007

BY BILL FREEHLING

Despite a pronounced slowdown in residential construction, the Fredericksburg-area economy is growing at a healthy clip.

That was the message delivered by Christine Chmura, president and chief economist of the Richmond-based Chmura Economics & Analytics, at Monday's annual meeting of the Fredericksburg Regional Alliance.

"It's nice to be speaking in a region where I have almost nothing but good news," Chmura said in a speech at the University of Mary Washington's Jepson Alumni Executive Center.

Chmura said the area's economy is outperforming that of the U.S. and Virginia overall. The region has been bolstered by spending on security and defense.

That's allowed the Fredericksburg region to absorb a marked slowdown in home building and dropping housing prices, Chmura said.

She said building permits in the Fredericksburg area are now 58 percent off the recent peak. Home prices have also come back to earth after soaring for years.

Chmura noted that home prices still aren't cheap. As of the end of the second quarter, just 23.5 percent of Washington-area residents could afford the median-priced home. The U.S. average was 41.9 percent.

Chmura noted that home prices are more affordable in the Fredericksburg area, but the region is lumped into the Washington Metropolitan Statistical Area because so many residents commute.

If Fredericksburg were its own MSA, Chmura said, it would rank 86th in economic growth nationwide.

Employment is growing faster here than statewide. More than a third of the jobs are in either retail or government. There are fewer manufacturing jobs in the Fredericksburg area than in many parts of the state.

Defense spending is a key catalyst behind why Chmura expects the region's economy and population to grow at a roughly 4 percent clip next year, outpacing statewide and U.S. growth.

Virginia is tops in the country in federal spending per capita, Chmura said. The 2005 Base Realignment and Closure Commission added about 2,700 new jobs to the area. She estimated that the "ripple effect" would add another 2,100 jobs, resulting in hundreds of millions of dollars of economic impact.

Chmura noted that for every 100 businesses that close in the Fredericksburg area, 138 new businesses open. In Northern Virginia, the ratio is 121 openings for every 100 closings.

Due to its proximity to Washington, lower cost of living, higher quality of life and availability of skilled labor, Chmura forecasted good times ahead in the Fredericksburg area.

"We expect your region to continue to grow," she said.

Date published: 10/31/2007