The Northern Virginia economy has been slowing, which has big implications for a state that depends on tax revenues from its biggest metro to subsidize rural school systems.
The New River Valley economy may be smaller but is one of the hottest in the state right now.
Meanwhile, the Lynchburg economy looks either great or troubled, depending on which set of statistics you’re looking at.
Those are some of the findings of Old Dominion University’s annual State of the Commonwealth report.
Some of these are trends we’ve written about before, but ODU, through its Dragas Center for Economic Analysis and Policy and the Strome College of Business, always does a good job of assembling a dragon’s horde of economic data together in one place. I always recommend this report as a must-read for anyone interested in public policy in Virginia, and this year’s report is no different. Here’s some of what you’ll find.
GDP over past year: Charlottesville and New River see fastest economic growth, Harrisonburg and Staunton shrink
Let’s start with gross domestic product, since that’s the standard measure of economic output. The ODU authors caution it may not be the best one (the one they say is best is coming up) and, as is often the case with some economic data, these numbers lag behind the calendar. The latest GDP figures are for 2023. Still, these are what we’ve got, so here they are:
As you can see, the fastest GDP growth came in the Charlottesville metro (4.2%), followed by the New River Valley (3.7%) — listed here as the Blacksburg, Christiansburg, Radford area. The surprise was that two Shenandoah Valley metros — Harrisonburg and Staunton — saw their GDPs shrink. As someone who visits those cities a lot, I sure don’t see that when I’m passing through — but just hold on, there’s more favorable data coming. (I also see where the Staunton-Waynesboro metro is now Staunton-Stuarts Draft; Waynesboro got demoted and the growth area around Stuarts Draft promoted.) Since this data is by official Metropolitan Statistical Areas, Danville and Martinsville aren’t included.
If you look over time, you’ll see that, while the precise numbers vary, Charlottesville and the New River Valley have often had the highest, or at least some of the highest, year-to-year GDP growth in the state. This shows, once again, the economic power of a research university that helps drive the local economy. Just a few weeks ago, I wrote about what Virginia Tech’s latest research spending numbers mean.
GDP over six years: Charlottesville and New River lead the state, Lynchburg has slowest growth
The ODU report didn’t compute GDP growth over five years but provided the numbers, so I did it myself and arranged the localities in descending order. What we see is that the two big university-based metros, Charlottesville and New River Valley, posted the strongest GDP growth over a five-year span. However, Lynchburg, which has multiple colleges, had the slowest GDP growth. That’s something that ought to be a concern to Lynchburg metro leaders, but before they freak out too much, they should wait until the next section, which has more favorable data.
Metro area GDP growth from 2018-2023 Charlottesville 13.3% Virginia 13.2% Blacksburg-Christiansburg-Radford 13.1% United States 12.2% Winchester 12.0% Virginia Beach-Chesapeake-Norfolk 10.8% Washington-Arlington-Alexandria 10.6% Richmond 9.5% Kingsport-Bristol 7.9% Roanoke 7.7% Harrisonburg 5.4% Staunton-Stuarts Draft 3.9% Lynchburg 2.0%
If you’re curious about the relative size of all the metro areas, by GDP, here they are:
Take a look at 2019. You’ll see that even before the pandemic, the GDP in Kingsport-Bristol, Lynchburg and Roanoke was shrinking. Then came the pandemic. So those three metros had a bigger hole to dig out of after the pandemic.
Taxable sales over five years: Lynchburg metro leads the state, Northern Virginia trails
The ODU report likes this measure best. “We argue that the taxable sales measure, while not a perfect measure of GDP, provides an approximation of economic activity in a region,” the report says.
Over a five-year swath of time starting in 2019 and ending in 2023, the Lynchburg metro area saw its taxable sales rise 5.0%, faster than any other metro in the state. Notice, too, that Staunton-Stuarts Draft came in second, tied with Kingsport-Bristol, so maybe we shouldn’t be that concerned about a one-year dip in GDP in the Staunton area. There’s obviously a big difference here between Lynchburg being last in GDP growth but first in taxable sales growth. This calls for more examination.
Perhaps more important, though, is who’s in last place, with the slowest growth in taxable sales over five years: Northern Virginia. That fits with other data we’ve seen; I’ve written multiple times about how census data shows some localities there, notably the behemoth Fairfax County, are flat-out losing population. Many theories have been advanced for this: high housing prices keeping newcomers out, a wave of older residents retiring to the Sunbelt, remote workers decamping for other locales. Whatever the reasons, a slowing economy in Northern Virginia has statewide implications. “Northern Virginia accounted for 38.3% of all taxable sales revenues in Virginia in 2023,” the ODU report says. “Slower taxable sales among these counties translates to slower taxable sales growth for the entire state.” And that, in turn, ought to get the attention of rural residents whose schools are largely subsidized by state revenues.
As we go through this data, you’ll see Northern Virginia show up on the slow end of things multiple times. However, before anyone gets too excited …
Taxable sales over one year: Revenue now dropping in Lynchburg, Staunton and Roanoke
The figures above capture five years. However, if you just look at the past year — from second quarter 2023 to second quarter 2024 — we see very different trends.
Here we see three metros where taxable sales are declining; definitely not the way we want to go. And, yes, the one dropping the fastest is Lynchburg, which had been growing the fastest. As the saying popularized by Mark Twain goes, “lies, damned lies and statistics.” These are statistics.
You’ll also see Northern Virginia ticking upwards, which is a good sign for the whole state for the reasons cited above. But now back to some bad news:
Labor force over five years: New River Valley has most growth, Bristol, Lynchburg and Northern Virginia shrink
The beauty of this chart is that it shows the size of the civilian labor force in each metro area, from before the pandemic to the most recent data available.
The figures for the New River Valley and Northern Virginia fit into what we’ve seen with other data: strong economic growth in New River, weakness in Northern Virginia.
What we may be seeing here is that the civilian labor force in Northern Virginia is down because some people are moving away. Lynchburg’s decline is harder to explain since the region has seen population growth.
Labor force over one year: Charlottesville growing fastest, Shenandoah Valley metros shrink
Remember that federal stats showed the GDP in Harrisonburg and Staunton-Stuarts Draft shrinking; these figures would seem to match up with those. Something seems to be happening, and it’s not particularly good.
Job growth over four years: Winchester and New River Valley post fastest growth, Northern Virginia barely changes, Lynchburg shrinks
Once again, we see the New River Valley near the top of a chart — this time for job growth over a four-year span. Only Winchester showed faster job growth. And once again, we see weak numbers from Northern Virginia.
What about Lynchburg, though? Based on these figures, it’s the only metro in Virginia that has seen the number of jobs shrink since pre-pandemic times.
The job numbers for Lynchburg have caused consternation, and controversy, in the past, because some federal statistics don’t count Liberty University, which is obviously a major economic driver in the Hill City. Others do. Accordingly, “we must express a note of caution about this finding,” the ODU report says.
This explanation follows: “Chmura Economics estimated that the four-quarter moving average of employment for the Lynchburg MSA was 111,589 in 2024 Q1, higher than the similar estimate from the BLS [Bureau of Labor statistics]. However, Chmura Economics’ data also suggest that the Lynchburg MSA has yet to fully cover all the jobs lost due to the COVID-19-related economic shock. Using the reported data from Chmura Economics on JobsEQ, we note there were 113,272 jobs, on average, in 2020 Q1 and 111,589 jobs, on average, in 2024 Q1 in the Lynchburg MSA. In other words, there were 1.5% fewer jobs in 2024 Q1 than 2020 Q1. If we examine the number of jobs, the Chmura Economics data are more ‘favorable’ than those from the BLS as the jobs estimates are higher. If we examine the percent change in jobs, the data are less ‘favorable’ as the percent decline in jobs is higher with the Chmura data compared to BLS data.” Got that?
While the precise numbers may be in dispute, there seems to be a consensus on the trendlines. And yes, that trendline does seem at odds with these jobs figures. Sorting out those discrepancies requires more economics classes than I took in school.
Income growth over five years: Fastest in Harrisonburg, slowest in Northern Virginia
We’re dealing here with percentages, so maybe we shouldn’t be surprised that Northern Virginia’s income growth is so slow. That metro is the most affluent in the state, so it’s harder to get a high percentage increase. Still, this data sits alongside some of the other: Sluggish job growth and the state’s slowest growth in taxable sales.
Also notable for us on the western side of the state: The metros in Lynchburg, Roanoke and Kingsport-Bristol are seeing income grow more slowly than Virginia, or the nation, as a whole. That’s not surprising, but still worth pointing out — especially since the New River Valley has seen such strong job growth. The region is growing jobs like kudzu, but that’s not moving the income needle much.
The bottom line
Taken altogether, what should we make of this? It seems clear that some areas — such as Charlottesville and the New River Valley — are doing pretty well, economically speaking. It also seems clear that what’s happening in Lynchburg is not so clear; some stats are amazingly good, others aren’t. Meanwhile, what’s happening in Northern Virginia is a big question mark that looms over the whole state.
ODU report has some advice and warnings for politicians
The ODU report has lots more to say. I’ll devote a future column to some other aspects of the report, as well as part of this Friday’s West of the Capital, our weekly political newsletter. You can sign up for West of the Capital, or any of our other free newsletters below: