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Richmond and the Recession

The nation is flirting with recession, as the news media remind us daily. But the economic slowdown is affecting some parts of the country worse than others. If you live in South Florida, where the home building industry has tanked, you're more likely to be hurting. If you live in Texas or the farm belt, where people make their living from oil, gas, or corn, you're wondering, "Recession, what recession?"

Where does Richmond stand in that spectrum from Feeling the Pain to Feelin' Good? There is a lag in the reporting of job and wage data, so it's hard to hard to say what's happening right now.  R'Biz will endeavor to keep you abreast of new information as it is published.

One interesting set of data from the Virginia Employment Commission tracks the number of business establishments, the number of jobs and he average wage levels up through the 3rd quarter of 2007. The data is more than a half-year old, but it gives an idea of how the Richmond region was faring as the economy entered the slowdown last year.

Here is the encouraging news: The number of business establishments in the Richmond Workforce Investment Region IX* has been increasing year to year, with 2007 marking the strongest of any year in the current economic expansion.

2007 (3Q)….. 21,534….. +4.6%

2006 (3Q)….. 20,596….. +3.1%

2005 (3Q)….. 19,976….. +3.4%

2004 (3Q)….. 19,313….. +2.9%

2003 (3Q)….. 18,771….. +1.8%

2002 (3Q)….. 18,432

As the number of businesses grew, so did the demand for workers. Here are the annual average employment numbers over the same period of time:

2007 (3Q)….. 371,150….. +3.2%

2006 (3Q)….. 359,604….. +2.2%

2005 (3Q)….. 351,930….. +2.9%

2004 (3Q)….. 342,176….. +2.2%

2003 (3Q)….. 334,775….. +1.2%

2002 (3Q)….. 330,810

Wage performance has been disappointing, however. Over five years of economic expansion, the average weekly, inflation-adjusted wage increased a cumulative total of 1.2 percent.

2007 (3Q)….. $784….. +0.23%

2006 (3Q)….. $755….. -3.77%

2005 (3Q)….. $762….. +2.31%

2004 (3Q)….. $722….. +3.73%

2003 (3Q)….. $674….. -1.31%

2002 (3Q)….. $665

In summary, in the years leading up to the current economic slowdown, the Richmond region was doing a fine job of business formation and job creation, but wages were barely keeping ahead of inflation. Wages are the most important component of total income and one of the best gauges of a region's broad-based standard of living. The numbers from a softer economy this year are not likely to represent an improvement.

* For some odd reason, Workforce Investment Region IX does not include the City of Richmond.