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WILLIAMSBURG - With new car registrations and building permits On the upswing, long-term confidence in Virginia’s economy seems high, according to the latest issue of the Virginia Business Report, published monthly by the Bureau of Business Research at the College of William and Mary.
“Both planned construction and new car purchases represent demand for durable goods with a long, useful life, usually financed with borrowed funds,” said Roy L. Pearson, editor of the report and director of the bureau. “The high levels of demand experienced in 1988 can be interpreted as a sign of Virginians’ confidence in the state’s economic health, and consequently, their willingness to make long-tmer financial commitments,” he added.
New car registrations increased eight percent in May over the same month in 1987, yielding a cumulative gain of 7.7 percent. Building permits in May increases 27.2 percent over May 1987, bringing that cumulative 1988 gain to 14.4 percent. The increases in building permits “makes this year’s level almost equal to the early 1986 amounts,” Mr. Pearson said.
He cautioned, however, that new construction and new cars are sensitive to interest rates. “The decrease in rates following the October stock market crash undoubtedly has been a positive force in the spring surge of new cars and construction,” he said. “But a strong economy, rising inflation and tightening of the availability of money by the Federal Reserve are nudging rates back up.” As a result, he predicted, the January through May surges will not be sustainable through the year.
Among other economic indica
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