President Donald Trump is strangling economic growth in the part of Virginia that supplies the biggest share of state revenue.
Northern Virginia’s economy was already starting to gasp for air before Trump took office, but his administration has now sent some key economic vital statistics spiraling into the negative range.
That’s not an opinion; it’s simply a summary of a new report by the Brookings Institution that documents how Trump’s downsizing of the federal government is playing out in Washington’s suburbs.
If you believe this downsizing is a wise policy that’s long overdue, this economic slowdown in the D.C. area may be a necessary side effect (and, in Trump’s view, one that ought to help the economy nationally). Nonetheless, the slowdown of economic growth in Northern Virginia is a problem that Virginia’s next governor is going to have to deal with. If she hopes to preside over any economic growth during her term, it might arguably be the biggest problem she has to deal with.
Here’s why the fate of the Northern Virginia economy matters to Southwest and Southside: Northern Virginia supplies about 42% of the state’s general fund tax revenue. Rural school systems (and many urban ones) get most of their money from the state, not their local government. Put another way, Northern Virginia subsidizes rural schools (and lots of other state services). Lee County in the state’s westernmost corner (which votes 80% or more Republican) may think it doesn’t have much in common with Arlington County (which votes almost 80% Democratic), but they are inextricably linked by the 50.4% of Lee County’s school funding that comes through Richmond. Richmond didn’t print that money; it extracted those dollars from taxpayers, with the single biggest amount coming from Northern Virginia.
Lee County is a convenient example geographically but Scott County, just to the east, is a better one fiscally: 66.1% of Scott County’s school funding comes from the state, according to the Virginia Department of Education.
If those — or other — localities want more funding from the state, they need for Northern Virginia’s economy to do well, and right now it’s not.
The Brookings report lays out a lot of facts and figures that have been reported separately — and adds some I haven’t seen before. Let’s hit the former before we dive into the latter.
The federal cutbacks are falling disproportionately on the Virginia side
The unemployment rate in Arlington County has risen more than twice as fast as the rate in Prince George’s County, Maryland, and almost twice as fast as in Montgomery County, Maryland. The unemployment rates in Alexandria and Fairfax County have risen exactly twice as fast as the rate in Prince George’s. The federal cutbacks are landing mostly on the Virginia side of the Potomac.
Unemployment in parts of Northern Virginia is rising 7 to 11 times faster than the national rate
Unemployment in Northern Virginia remains lower — much lower — than other parts of Virginia. It’s probably hard for Emporia to have much sympathy for Arlington when Emporia’s unemployment rate is 8.1% and Arlington’s is 3.5%. On the other hand, 40.9% of Emporia’s school funding comes through Richmond, so there is that.
In any case, the unemployment rate in localities around Washington is rising faster than anywhere else in Virginia — and is likely to rise even more when the impacts of federal buyouts start showing up in the statistics (and the economy at large). In Fauquier County, unemployment is rising 7 times faster than the national average. In Prince William County and Stafford County it’s rising 8 times faster. In Loudoun County, 9 times faster. In Alexandria and Fairfax County, 10 times faster. In Arlington, 11 times faster.
Trump has vowed more cuts if Democrats don’t back the Republican plan to keep the government funded; a government shutdown (which may be in effect by the time you read these words) will not improve these numbers.
Job growth in Northern Virginia is slowing
While the federal government is a major employer in Northern Virginia, it’s not the only employer. The good news: Jobs in the private sector in the region are growing. The not-so-good news: They’re growing at a much slower rate than elsewhere.
From June 2024 to June 2025, job postings in the U.S. are up 14.8%. In the Washington area, though, job listings were up just 4.7%.
There’s not much overlap between the jobs available and the workers available
Gov. Glenn Youngkin has called attention to how many jobs are available in Northern Virginia. However, Brookings says those jobs don’t overlap well with the skill sets of now-former federal workers: “Private sector job gains in the DMV region since January are concentrated in industries misaligned with the skills, fields of expertise, and professional backgrounds of most displaced federal workers. Of the net private sector jobs added in the DMV region so far this year, nearly 15,000 (45%) were in the construction sector alone, on top of 6,000 (18%) in hospitality and 4,500 (14%) in health care. While occupation-specific data for laid-off federal workers will likely not be available until early next year, these three industry sectors — which together added more jobs in the DMV region than the rest of the private sector combined — have historically had very low occupational overlap with the public sector, raising significant questions about the ability of private employers to absorb losses in the rest of the labor market.”
Others have made this point before, but these are new statistics.
The region’s workforce growth is slowing
The federal cutback may not be the only reason that job growth in Northern Virginia is slowing. Northern Virginia has also seen a dramatic slowdown in the number of working-age people moving into the region, according to the U.S. Census Bureau.
From 2010 to 2014, Northern Virginia saw its population of people aged 25-44 increase by 34,393, either through moves or younger people aging into that cohort.
From 2020 to 2024, Northern Virginia saw that age group grow by just 15,059 people — less than half of what the figure had been a decade before.
From 2010 to 2014, the region saw its population of people 45-64 increase by 51,276.
From 2020 to 2024, that age group grew by just 3,190.
What all this means: Northern Virginia’s working-age population isn’t growing as much as it once was; the Richmond metro’s working-age population is now growing at about the same rate. If you just look at ages 25-44, the Richmond metro is gaining almost twice as many people in that age range as Northern Virginia is. Northern Virginia’s high housing costs are often cited as the main reason here; it’s not easy for younger people to move into the region. At some point a slower-growing labor pool was going to translate into a slower-growing economy, and that time seems to be now.
Another way to look at this: Northern Virginia saw its 25-64 age range grow by 18,249 people — but its 65-plus range grew by 66,213. That suggests the region has a lot more people exiting the workforce than entering it.
Trump can’t be blamed for any of that — that’s a combination of basic demographics and local housing policies — but it does mean that his federal cuts come on top of an economy that was already headed for some tough times.
Now we come to what might be the three most important vital statistics.
More people are putting their homes on the market
Nationally, the rate at which people are putting their homes on the market is up 28.9% from June 2024 to June 2025. In the Washington area, it’s up 63.6%. The only major city with a higher rate increase is Las Vegas, at 77.6%. In the Richmond area, the rate is 17.3%. Brookings did not list figures for other localities in Virginia.
This seems likely driven by the federal cutbacks. Whether that or some other reason, the bigger question is where the sellers intend to move. Do they intend to stay in state or not? Youngkin has been rightly proud of Virginia reversing an unhappy demographic trend. When he took office, more people were moving out than moving in. Now it’s the other way around — more people moving in than moving out.
That could be in jeopardy if a lot of these Northern Virginia home-sellers move out of state.
Internships are down
Brookings reports a surprising figure: Nationally, job postings for internships are down 17.5% from June 2024 to June 2025.
In the Washington area, they’re down 36%.
This is a figure that I bet sets off alarm bells in the Virginia business community. There’s been a big push in recent years for more internships, partly as a way to get college students more connected to businesses in the state in hopes they stay here and don’t move out of state. The Virginia Higher Education Business Council, headed by former House Speaker Kirk Cox, has been especially active in promoting internships. A 36% decline in the state’s biggest metro area does not bode well.
Neither does this:
Venture capital flowing into the Washington area is down
Since Trump took office, the volume of venture capital flowing in the United States is up 13.47% from January to June. In the Washington metro, it’s down 31.21%.
Of all the stats presented here, I’d rank this as the most worrisome one. Venture capital speaks to confidence in a particular market and there seems little confidence here. Furthermore, it’s clear that Northern Virginia needs to build a new economy, one less dependent on the federal government. That means it needs more venture capital, not less. Brookings wonders whether this is a temporary fall that will later right itself or something more permanent. We just don’t know yet. Ultimately this seems more serious to me because employment may go up or down fairly quickly, but venture capital has more long-term impacts.
What this means for the next governor
Whether Virginia’s next chief executive is Winsome Earle-Sears or Abigail Spanberger, she will face an economic situation without parallel: Northern Virginia, long the golden goose of the state’s economy, will need special attention. She will have to support its reinvention and since there are only so many hours in a day, that means she can give less attention to other parts of the state — not out of any political bias but simply out of necessity.
Among the priorities: Attract more venture capital. Find ways to encourage more internships as a way to keep more college graduates in the state. Persuade many of the people selling to stay in Virginia.
None of that will ever find its way onto a bumper sticker or a campaign ad, but the next governor, whoever she is, will find these issues waiting for her on her new desk.
Where the candidates stand
You can see how the candidates for governor (as well as lieutenant governor, attorney general and many House of Delegates candidates) answered our questionnaire on our Voter Guide. We have individual pages for all 133 counties and cities Virginia so no matter where you live you can look on our Voter Guide to see who’s on the ballot in your community.
Want more political news and insights? You can sign up for our weekly political newsletter, West of the Capital. This week I’ll be taking another look at the latest early voting trends.