By Carten Cordell | Watchdog.org Virginia Bureau

ALEXANDRIA — The road to economic recovery in 2013 will be measured not in miles but in yards, feet and even inches, one think tank says.

“Although we have officially been out of this recession for a couple years, it is certainly the most tepid recovery in my lifetime,” Michael Thompson, president of The Thomas Jefferson Institute for Public Policy, said in a conference call.

The institute, based in Springfield, on Tuesday released its annual economic forecast, predicting continued growth for Virginia and the nation at large.

Slow and anemic growth, but growth nonetheless.

Christine Chmura, of Richmond-based Chmura Economics & Analytics, is principal author of the study. She predicts the national gross domestic product, or GDP, would grow 2.3 percent in 2012 and improve to 3 percent in 2013.

“Of course, there are headwinds out there, such as the continuing (debt) problems in Europe and slow labor market growth, that continue to cause our recovery to be slow,” she said.

But while growth is expected to continue at incremental rates, economists warn the Budget Control Act of 2011 will counteract gains made since The Great Recession.

The debt ceiling law, enacted last year to rein in government spending, calls for a $1.2 trillion across-the-board cut in January 2013 if Congress fails to pass deficit-reduction legislation.

“The biggest concern that we see out there right now that would probably throw off our forecast is the Budget Control Act,” Chmura said. “In January 2013, we will see this thing people are calling the Fiscal Cliff. I think it was that Office of Management and Budget, in its May report … (that) stated that we will likely be in recession in the first two quarters of 2013 if that law is carried out.”

Defense spending would account for a large portion of the budget cuts, effectively hampering growth in the state.

“Just to give a feel for how much defense spending means to Virginia, $60 billion annually comes into Virginia from (that) spending,” said Ryan Dunn, vice president of government and business relations for the Virginia Chamber of Commerce. “Fifteen percent of the entire commonwealth’s gross state product and 19 percent of Virginia’s workforce is directly tied to defense spending.”

The concerns over budget cuts and the volatile political climate in Washington may have already affected Virginia. In May 2011, the report says, the year-over-year pace of job growth in Virginia fell short of the national average for the first time, and that has continued this year.

“Northern Virginia has slowed and the sector of professional business services has slowed significantly, as well,” Chmura said. “That sector does see a lot of federal contract awards, and we don’t have any direct tie, but I do expect that some of the slowing is due to anticipated cuts that will be coming in 2013 if the Budget Control Act is not amended.”

For business owners in the state, job losses haven’t played as much a factor this year, but a batten-down-the hatches attitude to the market inhibits job creation.

“We have gotten past that point where (business owners) are laying off employees,” said Nicole Riley, state director of the National Federation for Independent Business. “They have either already done that or reworked their business plan to do what they need to do. Now, going forward, there is not much in the way of any plans to expand.”

Dunn said the best approach to recovery lies somewhere in the middle of the slash-and-burn and tax-and-spend spectrum.

“Take an approach of using a scalpel versus a chainsaw in budget cuts,” he said. “Looking at programs that work, especially inside of defense spending, where there can be feasible cuts versus an across-the-board cut.

“Cuts all across the board will do nothing but stifle innovation and disrupt any kind of economic stability that we might really be seeing right now.”