Gov. Glenn Youngkin came into office promising to build a “rip-roaring economy.”
By many measures, he’s done that: More jobs have been created under his watch than under any governor since the 1990s. Youngkin’s totals have been boosted by a post-pandemic recovery, but for much of his term Virginia’s job counts grew faster than the national average and at one point Virginia ranked as high as ninth-best in the country.
However, he may leave office with Virginia employment shrinking, through no fault of his own — but that of President Donald Trump and his policies to impose tariffs and reduce the federal workforce.
Furthermore, whoever is sworn in as governor in January — be it Republican Winsome Earle-Sears or Democrat Abigail Spanberger — will take over a state that is expected to have almost zero job growth and elevated unemployment in the first half of her term.
That’s the conclusion of the latest economic forecast from the Weldon Cooper Center for Public Service at the University of Virginia. To be fair, the center didn’t name names the way I just did, but it does lay out numbers and dates; all I’ve done is fill in the blanks. The forecast does, however, specifically cite federal workforce reductions and tariffs as the primary reasons why Virginia’s economy is expected, in its words, “to stagnate.”
Let’s walk through the economics, then we’ll get to the politics.
Virginia is projected to lose jobs this year
We often write that Northern Virginia is the state’s economic engine. It’s our largest metro and supplies 42% of the state’s general fund revenue. What drives the Northern Virginia economy is the federal government, and Trump is now reducing the size of that federal government. While that may or may not be good for the U.S. economy (feel free to debate this), it’s definitely not good for the Virginia economy.
Beyond the federal government, Virginia has an export-driven economy, with Canada as our top market, followed by China. Trump’s tariffs — a fancy word for taxes on imports — are intended to persuade companies to produce more goods domestically. While that’s a long-term goal, the short-term impact is higher prices for imports and uncertainty about export markets, particularly as other countries impose their own retaliatory tariffs.
That’s expected to slow job growth nationally and turn Virginia’s job growth from positive to negative. “By December 2025, the United States economy is expected to slow down with only 1,150,000 jobs added nationwide since December 2024, a 0.7% increase in this period,” the forecast says.
Virginia is already starting to see job losses, the center says. “Virginia saw job losses in three of the first six months of 2025. By contrast, Virginia experienced job losses in only three months of the previous four years.” The forecast warns that “delayed federal layoffs and postponed tariffs” mean that job losses are “projected to intensify” during the rest of the year. The center expects Virginia will lose 22,500 jobs over the second half of this year, and finish the year at -11,700 jobs, a decline of -0.3%.
Virginia is projected to see almost no job growth in 2026
The forecast warns that “job losses are expected to continue into early 2026” with a recovery not starting until the second quarter — April to June. It will take the rest of the year to balance out those first-quarter job losses. The year 2026 is “projected to close with a net gain of only 300 jobs — effectively resulting in zero employment growth,” the forecast says.
Virginia job growth is projected to remain slow in 2027
After a projected job shrinkage of -0.3% this year and a statistically flat 0.0% in 2026, Virginia’s job growth is forecast to be just 0.8% in 2027 — less than half of what it was last year, when it ran at 1.7%, or 2023, when it was 1.8%. That projected 0.8% job growth rate would be the state’s slowest in a non-pandemic year since 2016, when it was 0.71%, according to figures from the Bureau of Labor Statistics and compiled by Arizona State University.
Unemployment projected to reach highest rate for a non-pandemic year in 11 years
The Bureau of Labor Statistics reported Tuesday that Virginia’s unemployment rate has now risen for the seventh straight month, standing at 3.6% in July. That’s the second fastest rate in the country, tied with Oregon and exceeded only by Mississippi.
The Weldon Cooper Center economic forecast sees that rate continuing to rise to 4.7% in June 2026 before it starts to edge lower. That would be the state’s highest rate since February 2021, when Virginia and the nation were coming out of the pandemic. If we look past the pandemic, then the last time Virginia’s unemployment rate was 4.7% was February 2015, when it was trending downward after a high of 7.1% in February 2010 during the aftermath of the Great Recession.
Virginia’s job losses are tied to federal reductions — but the biggest numbers aren’t federal employees
In the first half of 2025, Virginia saw 7,800 federal government jobs go away, along with 500 state government jobs. However, local governments added 5,000 jobs during that period, the report says. Those numbers offer no insight as to whether or how those two trends — federal and state down, local up — are related. The report just says that, statistically speaking, the growth of local government jobs “softened” the impact of the federal cuts.
Still, more federal job cuts are coming; some of those workers took buyouts and won’t count as job losses until later in the year. The forecast projects a net loss of 9,300 government jobs by year’s end.
That, though, isn’t the biggest category of job losses. “Professional, Scientific, and Technical Services — the leading private-sector industry in Virginia — is contracting for the first time in over a decade,” the report says. That’s because many of these jobs are in federal contracting. The report sees 9,500 losses in that sector by year’s end.
Manufacturing jobs will continue to decline
The collapse of manufacturing is well-known. Trump’s tariffs are intended to revive at least some parts of it but this forecast does not see that happening. On the contrary, it sees manufacturing declining. “The current year has been marked by high-profile closures and layoffs, including the shutdown of the Georgia-Pacific Plywood Plant in Emporia and announced layoffs at Goodyear in Danville,” the report says. “By the end of 2025, manufacturing employment is projected to decline by 1.4%” — or 3,400 jobs in all.
The job growth will come in health care, construction and transportation/warehousing
The biggest job growth has been, and will be, in health care. The report says the state has already added 10,100 health care jobs this year, but says that growth will slow to hit a year-end total of 12,400.
Construction has added 8,000 jobs so far this year, but it, too, will slow, for a year-end total of 8,400 jobs.
Transportation and warehousing has added 3,100 jobs and is projected to end the year at 3,800. “Ongoing uncertainty persists regarding whether new tariffs and reduced international trade will moderate growth,” the forecast warns.
And now, for the politics.
The forecast doesn’t deal with politics, but I will, so if you don’t like the following analysis, blame me, not the economists at Weldon Cooper. Their numbers, my words.
I’ll divide this political analysis four ways.
The 2025 elections: This forecast highlights a difficult issue for Virginia Republicans
Broadly speaking, these numbers show the central problem of the federal cuts: The jobs being created (health care, construction, transportation) don’t necessarily match the skill sets of the people losing their jobs (in professional services and government). They also may not necessarily be in the same place; this report just deals with state-level numbers.
Overall, though, if the forecast is right and Virginia’s job count shrinks, that’s bad economic news for Virginia — and bad political news for Republicans, since these cuts have been set in motion by a Republican president and cheered on by a Republican Congress. The federal cuts in Northern Virginia seem likely to energize a strongly Democratic voting bloc in an off-year election. The Roanoke College poll that came out Tuesday shows that Democrats are more enthusiastic about voting this year than Republicans; Republicans don’t need Democrats to be further motivated. I’ve written before that Earle-Sears needs a better response to the federal cuts; so far, she’s not been particularly empathetic. Her running mate, lieutenant governor hopeful John Reid, may have the same policy views but adopts a more politically appealing tone when he delivers it.
Republican Attorney General Jason Miyares may be able to escape this report by focusing his campaign on public safety issues, although that didn’t stop Democrat Jay Jones from blaming Miyares, anyway. However, a candidate for governor simply has to talk about the economy, and this forecast doesn’t help Earle-Sears.
2026 and a new governor: She’ll have to deal with a stagnant economy
If this forecast is right, you have to wonder why either candidate would want to be governor. Whoever wins is going to have to deal with at least two years of economic hard times. This report doesn’t address what state revenues will do, but there’s nothing here that suggests the money will be rolling in. This report does imply that the next governor isn’t going to be spending a lot of time at groundbreakings and ribbon-cuttings. If we were hiring a governor instead of electing one, we ought to be asking candidates about their experience in managing tight budgets — except that neither of these candidates has executive experience. Few Virginia governors have. Some tough choices lay ahead.
2026 and the congressional midterms: Not good timing for Republicans
Midterms are almost always bad news for the party in power; it’s just a matter of how bad the news is. This forecast, while focused on Virginia, also cites national estimates from Moody’s, the financial services company, that warns the U.S. economy will also slow in 2026. If you’re a Republican, these forecasts are not happy ones: Moody’s sees inflation next year running higher than it did last year and job growth running lower. Americans last year were so unhappy about the economy that they voted to throw out the party in power, but instead of things getting better, they are forecasted to get worse. Maybe this is the “readjustment” phase that Trump has said we should expect, but Americans are notoriously impatient. Republicans will need a better economy next year than the one forecasted here (which is likely why they’re trying to orchestrate some mid-decade gerrymandering in Texas and elsewhere, to build in some insurance seats).
Beyond 2026: We don’t know
These forecasts only go through 2027 and, just like the weather, the further out you look, the harder it is to make predictions. Ronald Reagan presided over a recession in the 1982 midterms and his admonition to “stay the course” didn’t work; voters sent bigger Democratic majorities to Washington. Two years later, though, the economy was better and Reagan won reelection in a landslide.
For now, if you’re a Virginia Democrat, you probably want to talk about this forecast every day. If you’re a Virginia Republican, you either need to find a different way to talk about this forecast or find something else entirely to talk about. Either way, the next governor may find herself wondering why she wanted the job.
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