VIRGINIA'S RESILIENT ECONOMY SHOULD CONTINUE
 TO SEE MODEST GROWTH 

	CHARLOTTESVILLE, Va., Dec. 21 -- Virginia's economic outlook
is good but hardly spectacular for the coming year, a University of
Virginia economist says.  "With no national recession in sight, the
prospect is for continued growth but at the modest rate experienced
in 1996," says John L. Knapp, professor and director of business and
economic research at U.Va.'s Weldon Cooper Center for Public Service.
	Assessing the Virginia economy at year's end in the center's
University of Virginia Newsletter, Knapp points out that the state
could be adversely affected in future years by possible further
downsizing of the national defense establishment. A major review of
defense policy by the Clinton administration is scheduled for
completion by May 15, Knapp notes.  The review is expected to
examine the nation's current policy of maintaining sufficient armed
forces to fight two wars simultaneously.  Large cuts in troops and
procurement could have negative effects upon Virginia's economy in
future years.
	Knapp says two events hampered the state's economy in the
past year: the federal shutdown over the budget impasse, and the
Blizzard of 1996. Continued downsizing of the federal government,
particularly in defense, is a fundamental factor in Virginia's
modest growth, he says. 
	But Virginia has shown resilience in adapting to a much
smaller federal presence than in the 1980s, and the state's
anticipated growth in new fields such as silicon chips and bio
medical engineering is promising, Knapp writes.  Another positive
aspect of Virginia's economy is that unemployment remains low.
	Because the Virginia economy reflects the national economy,
national developments will continue to be the major predictor for
what will happen to the Commonwealth's economy, Knapp says. 
	Virginia's economy will grow at about the same modest rate
as did the nation's in 1997, and the unemployment rate is likely to
stay below the national rate.  In 1997 the Virginia unemployment
should be about 4.4 percent, Knapp says."
	A modern economy is constantly changing in response to
market developments and new technology. "Virginia's economy is no
exception," Knapp says. "Nonetheless, perception may lag behind
reality. In the eyes of many, Virginia is still associated with the
manufacture of tobacco products, textiles, apparel, furniture, and
war ships; with the mining of coal; and as the location of many
federal civilian and military personnel."  Although these
"traditional" industries are important, their relative size in terms
of wage and salary and proprietor earnings has dropped significantly
over the last decade. In 1985 the "traditional" industries accounted
for 21.8 percent of total earnings; ten years later their share had
dropped to 16.2 percent, a 26 percent decline.  Fast growing sectors
in Virginia include finance, insurance and real estate, private
health services and business services.  Their combined share rose
almost 20 percent over the period. 
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December 20, 1996
	For interviews or additional information John Knapp may be
reached at (804) 982-5604.  Television reporters should call our TV
News Office at (804) 924-7550.