VIRGINIANS CAN LOOK FORWARD TO A "DISTINCTLY AVERAGE"
AND STABLE ECONOMY IF NORTHERN VIRGINIA
 CAN CONTINUE TO ADJUST

	CHARLOTTESVILLE, Va., Jan. 5 -- A decade ago, before the
post-Cold War downsizing of the military, Virginia's booming economy
regularly outperformed the nation's.
	Today, according to University of Virginia economist John L.
Knapp, the outlook for the state's economy can be summed up as
"distinctly average."
	Since the state's economy is now a "satellite" of the
national economy, says Knapp, director of economics research at the
Weldon Cooper Center for Public Service, the 1996 forecast for
Virginia closely mirrors the prevailing national outlook: slightly
lower modest growth and some slowdown in business investment,
coupled with low inflation, lower interest rates and relatively low
unemployment.
	But in the forthcoming January issue of the center's
University of Virginia News Letter, Knapp warns that one possible
adverse turn for Virginia could be that downsizing of the federal
government will lead to further slowing of economic growth in the
Northern Virginia suburbs of Washington, D.C.  (A protracted federal
shutdown could bring possible unforseen woes, he adds.)
	Describing that region as "the slowing engine of the
Virginia economy," Knapp says Northern Virginia should continue to
play a major role in leading the state's economy. "But it will not
exceed the growth in other metropolitan areas in Virginia by the
margins of the past."
	And with both political parties pushing for a balanced
budget, Northern Virginia could be particularly hard hit by any
further downsizing of the government, Knapp warns. "With less
federal government, the challenge is going to be whether Northern
Virginia can continue to convert its economy smoothly into other
directions such as technology-related industries."
	On the bright side, the state's long-term outlook was buoyed
this year by announcements of large-scale manufacturing plans by
Motorola for a plant in Goochland County and a joint venture by
Toshiba and IBM in Manassas.  Also, the final report of the Defense
Base Closure and Realignment Commission called for the closing of
only a few minor installations in the state and not the major
base-closings that some had feared.
	The year 1995 was a good though not a spectacular one for
Virginia economically, Knapp said.  Employment increased moderately
and unemployment stayed low.  Real income for Virginians edged
upwards, "but by the standards of the 1980s the gains were modest."
	If national economic trends don't worsen and Northern
Virginia can continue to convert its economy from heavy dependence
on the government sector, Knapp said, most Virginians probably can't
find too much to complain about being "distinctly average."
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January 4, 1996
	For interviews or additional information John Knapp may be
reached at (804) 982-5604 (office) or 295-2486 (home).