NORFOLK, Va. (AP) — The military-dependent region of Hampton Roads will lose more than 12,000 jobs this year due to automatic spending cuts in the federal budget, according to an economic forecast released by Old Dominion University on Friday.
The billions of dollars in automatic cuts begin to take effect on Friday, although many of them won’t be felt for months.
The university had previously forecast that the region would gain more than 5,000 jobs this year if the cuts didn’t take place. The revised forecast is based on specific details of the proposed cuts that were released by the military branches and White House in recent weeks.
The forecast doesn’t estimate what the job losses will be in other parts of the state, although northern Virginia is also expected to take a significant hit. A study released by George Mason University last summer estimated that statewide, Virginia would lose more than 136,000 jobs from defense cuts alone.
The Hampton Roads region plays host to all five branches of the military and is home to the world’s largest naval base. President Barack Obama used the region as a backdrop to call for avoiding the automatic spending cuts earlier this week when he spoke at Newport News Shipbuilding, the sole builder of U.S. aircraft carriers and one of two companies that produces nuclear-powered submarines.
Vinod Agarwal, director of Old Dominion University’s Economic Forecasting Project, said many of the job losses would come from government contractors in construction and the ship repair industry. The Defense Department has also said it would furlough its civilian employees. While members of the military will keep their jobs and their pay, their training will be cut and maintenance on ships will be deferred, among other things.
At a televised news conference in Washington, Rep. Rob Wittman, R-Va., joined a chorus of colleagues saying that the cuts need to be avoided.
“We as a nation have always stood behind our military, stood behind our men and women in uniform that defend this nation to make sure that they have the overwhelming superiority on the battlefield when we call on them to defend this nation. That is our obligation as a nation. With this sequester, we will no longer be able to do that,” he said. ”
While most of the cuts are focused on the military, eventually the economic impact would spread into other sectors of the economy.
“It will obviously have a negative impact on state and government revenues. You’re talking about lots and lots of jobs. These people aren’t going to be spending money in the economy,” he said. “This may actually have some negative effects on housing prices as well.”
The forecast says the region stands to lose more than $2 billion in direct and indirect spending this year. Of that, more than $1.8 billion is a result of cuts to the Defense Department’s budget, according to the forecast. Agarwal said the ripple effects from such spending cuts will take time.
Agarwal said if the cuts continue into 2014, the job losses in the region could reach 30,000.
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Brock Vergakis can be reached at www.twitter.com/BrockVergakis
