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NATIONAL AND LOCAL FORCES SHAPING A NEW ECONOMY FOR THE VIRGINIA PENINSULA

 WILLIAMSBURG, Va., May 28 /PRNewswire/ -- The Business Scribe, Inc., issued the following:
 The U.S. and Hampton Roads are showing continuing unmistakable signs of a recovery but at a slow pace. The Hampton Roads economy is being buffeted by the same trends affecting the nation -- a relatively slow job recovery and early indications of possible increases in inflation and interest rates. Hampton Roads faces special problems because of its heavy dependence on defense contracts and military spending in the face of continuing cost reductions in both these areas. However, the long- term outlook for Hampton Roads is essentially upbeat because of its unique assets -- the port and its transportation infrastructure which will always make it a center of naval activities and international commerce, its ocean location which will continue to attract retirees and people building second homes and the history of the area which will continue to fuel tourism.
 These were some of the conclusions presented by two of Crestar Banks' officers at the James City County Business Leaders Breakfast Meeting held at the Kingsmill Resort in James City County on May 27. Alan Gayle, a Crestar senior vice president for Short Term Investment Management, looked at the Peninsula economy from a national perspective and the possible effects of President Clinton's programs. Christine Chmura, a Crestar vice president and corporate economist, presented a local perspective of Hampton Roads' economy.
 "The slow growth we've seen in the national economy will continue," said Gayle. "But so will the uncertainty that has made many business people lose sleep. The U.S. has added only 700,000 new jobs during this recovery period, well below the average of similar periods following a recession.
 "I also believe that the best news about interest rates and inflation may be behind us -- with gradual increases possible in the months ahead," said Gayle. "The prices of crude materials going into production is increasing at a faster rate."
 "I am concerned about a pro-jobs president making it more expensive to hire people," he said. He cited as an example the health care program. "There is no question that expanding health care is something we must do. But how are we going to pay for it? If these costs become another payroll tax, it may further inhibit employers from hiring new workers."
 "In the 1980s Hampton Roads' economy outperformed the nation, due primarily to increases in defense spending," said Chmura. "The area also did relatively well in the recent recession. The departure and return of military forces and their families during Desert Storm generated a great deal of income for the region.
 "However, Hampton Roads is now seeing some bits of economic weakness," she said. "Housing starts are off on the Peninsula. The area is more heavily dependent on federal defense and military spending than the rest of Virginia." She also stressed the interdependence of the region. "For example, even though James City County has relatively few defense contracts, it exports many workers to defense- and military- related jobs in Newport News, Hampton and Norfolk.
 "We will see many changes in the months ahead," said Chmura. "But I believe we are seeing our economy becoming more global. In this global environment Hampton Roads has a very enviable position to take advantage of those changes. In the year 2030, if an economist gave this group another report I believe he or she would show some charts that showed employment dipped slightly in the 1990s. But would also add -- we have simply seen a transition to a new economy. Hampton Roads has many characteristics that will continue to make it a very prominent and successful region on the East Coast."
 -0- 5/28/93
 /CONTACT: Hal Gieseking, The Business Scribe, 804-229-0792, or Steve Blanks, president, Crestar Bank, Williamsburg, 804-253-9222/


CO: The Business Scribe, Inc. ST: Virginia IN: SU: ECO

DC-KD -- DC005 -- 3257 05/28/93 08:03 EDT
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Date:May 28, 1993
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