Source: Bureau of Economic Analysis, Regional Economic Information System

Better yet, when adjustments are made for differences in the cost-of-living using a new regional price parity index, it bests the U.S. by almost 10% and even manages to inch past Virginia with $43,449 compared to $43,406.

Source: Bureau of Economic Analysis, Regional Economic Information System and Aten, Figueroa, and Martin (2011)

At the beginning of the period, this convergence reflected Roanoke’s growth as a manufacturing center and regional transportation hub as well as the same rising tides that have lifted boats throughout the southeast. But, more recently, the causes have been varied.  As the region began to lose some of its industrial luster, the services sector gradually picked up much of the slack and the economy became more diversified.  Another factor is the much slower population growth of the Roanoke metro area compared to the rest of the U.S. and Virginia in the last three decades. 

Source: Bureau of Economic Analysis, Regional Economic Information System

The population growth has been uneven among age groups, with younger adult cohorts more likely to migrate for education, employment, and lifestyle reasons at the same time that the region attracts retirees because of its natural amenities, low cost-of-living and excellent medical services. This continued migration pattern combined with aging-in-place baby boomers has produced a relatively much larger senior and near-retirement population and much smaller young-adult population than Virginia as a whole.

Source: U.S. Census Bureau, 2010 Census

These demographics are reflected in personal income statistics.  Transfer payments as a percentage of total personal income have grown at a faster clip than elsewhere and now constitute almost 20 percent, compared to 18 percent for the U.S. and just 13 percent for Virginia.

Source: Bureau of Economic Analysis, Regional Economic Information System

The key factor in the growth of transfer payments, particularly over the last 10 years, are government medical payments for programs like Medicare and Medicare.  The recent recession has also created a recent spurt in retirement, disability, and public assistance transfers.

Source: Bureau of Economic Analysis, Regional Economic Information System

The enormous growth in medical transfer payments helps to explain some industrial restructuring that is occurring in the Roanoke region. As people retire and age, their disposable income generally decreases with a decline in earnings but their medical spending increases as a result of greater need for medical care and eligibility for public insurance such as Medicare and Medicaid. Therefore, health services has displaced retail trade (which has remained largely flat in terms of employment) as the largest industrial sector in the region.

Source: Virginia Employment Commission, Quarterly Census of Employment and Wages

Whether the continued upward trajectory in per capita income is sustainable is questionable.  Federal entitlements cuts are increasingly eyed as key to federal deficit reduction efforts, and the Affordable Care Act tasks government agencies with finding ways to reduce spiraling health care costs.  Moreover, the continued attrition of young adults from the workforce could erode the economic competitiveness of the region. On the other hand, economic and population growth are not the same as economic development. Indeed, one recent study found that slow-growing counties in non-metropolitan areas tend to prosper more than fast-growing counties.  But, more about that later. 

Unfashionably late and overhyped, again.

Bottom line. Not only is there light at the end of the tunnel, but we’re emerging from the tunnel. However, it’s going to take some time to adapt to the sunlight after nineteen months in the cave.

And, for accuracy’s sake, we should remember that it’s a panel of experts at the National Bureau of Economic Research that calls the troughs and peaks of business cycles, not Newsweek or anybody else. They use a dashboard of economic indicators and gut judgment. So, a few consecutive quarters of robust Gross Domestic Product growth followed by anemic growth and continued job losses do not mean that the recession is over. Consequently, it may be years before any “official” declaration is made, if a declaration is warranted.