For every federal government job that Virginia loses, the state will need to create two private-sector jobs to equal the same economic impact.
That’s one of the main conclusions in Old Dominion University’s annual State of the Commonwealth report on Virginia’s economy.
Overall, it paints a dour economic picture for the state, partly because of President Donald Trump’s economic policies, partly for other, unrelated, factors. The 148 pages of charts and graphics document a Virginia where job growth under Trump has been “anemic,” the state’s two biggest economic engines in Northern Virginia and Hampton Roads are losing jobs faster than anywhere else in Virginia, and the economic outlook calls for higher unemployment and slow job growth.
The report details multiple reasons for this — Trump’s tariffs have resulted in countries retaliating by buying fewer American goods so exports through Hampton Roads are down, and restrictions to immigration have slowed a key driver of Virginia population growth — but the main cause is Trump’s reductions to the federal workforce.
“Why are federal civilian employees important for the Commonwealth?” the report asks. “These employees represent ‘fiscal gold’ for Virginia. Federal civilian employees tend to be older, more educated, and relatively more experienced than their private sector counterparts. The compensation of federal civilian employees is also higher. In 2023, the average wage of a federal civilian employee was 1.6 times that of the average wage of a private sector employee in Virginia. This means that for every lost federal civilian job in the Commonwealth, the private sector would need to generate 1.6 jobs to make up for the lost wages associated with the federal job. Given that federal civilian employee benefits tend to be higher than private sector benefits, in terms of total compensation, this ratio is likely closer to 2.0, a signal of the challenge that awaits Virginia in 2026.”
The report’s general findings mirror those of other economic reports about Virginia, such as the economic forecast from the Weldon Cooper Center for Public Service at the University of Virginia and the information recently presented to the Senate Finance Committee during a meeting at Radford University. What’s different about this report, which was prepared by economists at the Dragas Center for Economic Analysis and the Strome College of Business, is the level of statistical details that are laid out.
Here’s a summary of some of the key findings:
Job growth in Virginia this year has been ‘anemic‘
Job growth in Virginia, which had been running slightly ahead of the national pace, started falling behind in 2013 and has been slower ever since then. That’s a structural issue that stretches over multiple presidents and multiple governors, from both parties. Starting this year, job growth suddenly slowed down. “In 2024, employers added an average of 6,167 jobs a month,” the report says. “From January to August 2025, average monthly job growth was only 963 jobs a month. For an economy with almost 4.3 million jobs, one would not be wrong as characterizing the monthly job growth in 2025 as anemic.”
The federal government shutdown has made it difficult to obtain statistics from August onward, the report says. “It is possible that job growth, for all intents and purposes, stalled in early fall and we will not know where and by how much until 2026.”
That raises the question as to why job growth has been slow, at best. The report is careful to stick to facts and figures, but many (though not all) of those statistics point directly toward Trump.
Employment is down everywhere, but it’s down the most in Northern Virginia and Hampton Roads
Overall employment (the flip side of a rise in unemployment) has dropped statewide to such an extent that the report warns the state’s economic expansion may have “come to an end.”
The report lays out these numbers: “Individual employment has declined even more precipitously than the civilian labor force in 2025. In August 2025, there were 60,840 fewer individuals reporting they were employed in Virginia than January 2024, that is, the gains in 2024 were erased in 2025. In total, individual employment declined by 79,126 Virginians from January 2025 to August 2025. It would appear that the economic expansion of the last four years has, at least from the perspective of the labor force and individual employment, come to an end in 2025.”
Those declines have been steepest in the state’s two biggest metros. The ones in Northern Virginia can be attributed largely to the federal cutbacks. The ones in Hampton Roads are less clear. It’s a region that’s been working to rebuild its economy ever since sequestration in 2013 and other military cutbacks. That’s why the state’s GO Virginia economic development initiative grew out of Hampton Roads.
Here’s why this matters so much: Northern Virginia accounts for 43.7% of the state’s gross domestic product; Hampton Roads is second at 17.3%. Between them, they comprise 61% of the state’s GDP. If those two metros experience economic trouble, we all have trouble, because that’s where most of our tax revenue comes from.
Virginia’s GDP growth has slowed and may not recover anytime soon
While the year is incomplete, ODU forecasts that the state’s GDP growth this year will come in at 1.5%. If you set aside the pandemic year of 2020 as an aberration, that would be the lowest annual GDP growth in Virginia since 2016. Before that, you have to go back to the aftermath of the Great Recession to find lower GDP growth in Virginia.
“After contracting in 2022 Q1, Virginia experienced 11 straight quarters of growth until real GDP contracted by -0.6% in 2025 Q1,” the report says. Growth picked up some after that but not a lot. “It is likely that Virginia’s economic growth will not return to previously observed levels due to changes in trade, federal spending, and federal civilian employment policy,” the report says.
All three of those factors are related directly to Trump administration policies. They may or may not be good for the country at large, but the ODU report makes the case that they’re forcing Virginia to downsize its expectations. In 1981, Merle Haggard released his hit “Are The Good Times Really Over?” This report seems to say that as far as Virginia is concerned, the answer is yes — at least for as far as we can see right now.
Tariffs have depressed port traffic through Hampton Roads
Trump’s tariffs are intended to spur more domestic manufacturing and reduce dependence on foreign imports. Indeed, ODU’s report includes a chart that shows that since 2010 (but especially since 2015) we’ve seen a growing imbalance of trade through the port at Hampton Roads. There’s been a widening gulf between the dollar value of imports and the dollar value of exports. In other words, we’re spending more to buy stuff than we’re paid getting to sell stuff.
Accordingly, Trump might be delighted to see this chart, which shows how the dollar value of imports through Hampton Roads has fallen this year. Of course, those who work at the port or related industries (trucking, retail, warehousing) might look at this and see that this simply means less work — the business of trade is a complicated one.
However, Newton’s Third Law of Motion often applies to economics as well as physics: For every action there is an equal but opposite reaction. In this case, other countries have retaliated by imposing their own tariffs, which makes it harder for American companies to sell their goods overseas. Or some may have simply stopped buying American. Canada is Virginia’s biggest destination for exports, but the Canadian prime minister, Mark Carney, is now working to decouple his economy from ours because Trump has made us an unreliable partner, from the Canadian perspective. (This is a purely Trump phenomenon. This fall, the business group Virginia FREE organized a trade mission to Ottawa to try to improve ties. That delegation included some high-profile Republicans, such as former Gov. and Sen. George Allen.)
In any case, we’ve seen the value of American exports through Hampton Roads decline, as well.
There’s no other way to describe these trends: This is not good. This means we’re selling less stuff to the world.
Even worse, the evidence suggests that tariffs are having the opposite effect of what’s intended: The dollar gap between what we’re buying through the port and what we’re selling is widening, not contracting. That’s because imports have bounced around while exports are more consistently down:
We may not have enough data to pronounce a permanent trend, but the short-term one is not good. “The declines in trade volumes for the Port of Virginia will slow growth in the Hampton Roads region and through the Commonwealth,” the report warns. Yes, the same Hampton Roads that’s already seeing employment decline and is tied with Northern Virginia for the sharpest drop in the state.
A decline in trade through Hampton Roads has statewide implications: It means less trade through the inland port near Front Royal in the Shenandoah Valley and lessens the prospects for Southwest Virginia’s desire for a second inland port in Washington County.
Spanberger takes office when the economic outlook is dour
Former Gov. Douglas Wilder tells the story of how, after he was elected governor in 1989, he met with outgoing Gov. Gerald Baliles, who broke the news that there wasn’t going to be much money left in the state treasury. Wilder’s four years in office were spent steering the state through lean times. He had not expected to be the austerity governor but circumstances forced his hand.
Spanberger may be in much the same situation with the economy. Gov. Glenn Youngkin has, until this year, presided over some good times. In 2023, we saw the fastest GDP growth of any year since 2010 (not counting the inflated growth rates in the rebound that followed the pandemic). Then came Trump and tariffs and federal job cutbacks, and Spanberger will take over a state with a very different future in front of it.
The ODU report, like others before it, cautions that we shouldn’t expect too much in the coming years. “If tariffs remain in place and there are further reductions to federal civilian employment, then the prospects for growth in Virginia diminish considerably,” this report says.
In another section, it advises: “While the state government enjoyed a surplus of tax receipts at the end of FY 2025, economic headwinds will likely slow the growth of tax collections in the current fiscal year. Higher prices and economic uncertainty are also likely to depress consumer and business sentiment in 2026, creating an environment that is less conducive to growth.”
In yet a different place, the ODU report says that economic growth in Virginia “will likely slow due to economic uncertainty, declines in federal employment, and the increasing impacts of tariffs on international trade.”
Spanberger vowed to be the affordability governor, but she’s going to be forced into being an economic development governor.
I’ll have more from this report in the coming days. Speaking of the coming days, I write a political newsletter that comes out every Friday afternoon. You can sign up for that or any of our free newsletters here:
