Three new economic reports that came out last week suggest that Virginia’s next governor is going to have to spend a lot of her time dealing with a sluggish economy.

• The state’s two largest metro areas — read: Northern Virginia and Hampton Roads, the state’s largest economic engines — are now losing jobs.
• Virginia’s economic growth is now among the lowest in the country and is projected to remain slow through at least the first two years of the next governor’s term.
• Unemployment is rising statewide and is projected to keep rising in 2026.

The three reports come from the Brookings Institution, Old Dominion University’s Dragas Center for Economic Analysis and Policy and the University of Virginia’s Weldon Cooper Center for Public Service. All three cite the same thing for this sour economic outlook — President Donald Trump’s policies, which have reduced federal employment and increased tariffs, both of which have hit Virginia uniquely hard because many of Virginia’s jobs have been tied to the federal government and beyond that the state has a trade-based economy.

The ODU report came in the form of a presentation that Robert McNab, who heads ODU’s economics department and is director of the Dragas Center, gave to the Senate Finance Committee. It ended with a slide headlined: “Fewer Jobs, Higher Prices, Slower Growth.”

Virginia’s elections this fall have been dominated by other things — Jay Jones’ text messages, who can use which restroom, who feels which way about Trump — but this is the economic reality that all the winners, from the governor down to local governing boards, will have to deal with. If we treated the election of a Virginia’s chief executive as equivalent to hiring a corporate CEO, we’d be evaluating which candidate could do the best job navigating the state through an economic slowdown and coming out on the other side with an economy that, by necessity, will need to look different than the one we have today. The chief economist at Moody’s Analytics recently listed Virginia as one of 22 states that are “in or close to a recession.” The Federal Reserve disputes that analysis. Whether Virginia is or is not in a recession, the state is certainly seeing some economic warning signs.

I’ll divide this summary of those three reports into two parts. Today, I’ll look at what’s happening now — actual, documented facts and figures. On Wednesday, I’ll look at what’s forecasted to happen. 

The state’s two biggest metros are losing jobs

The ODU report, drawing on Bureau of Labor Statistics data, shows that three metro areas have lost jobs from August 2024 to August 2025. Of those, two are the state’s biggest — Hampton Roads and Northern Virginia. To be precise, the data for Northern Virginia is actually for the entire Washington metro, but previous data from Brookings has shown that most of the job losses in the Washington metro have come on the Virginia side of the Potomac.

Virginia is still gaining jobs overall, but that job growth has come elsewhere — primarily in the Richmond metro, along with smaller job centers in Charlottesville and the northern Shenandoah Valley around Winchester.

These job figures sync up perfectly with previously-released census data that shows Northern Virginia and much of Hampton Roads losing population, while population growth is concentrated in an arc that runs from Winchester to Richmond to Suffolk. 

If the loss of jobs and population in some of these places continues, it will put Virginia in a situation that none of us have ever seen before. The last time that Virginia Beach lost population in a diennial census was in the 1830s when it was still Princess Anne County. The last time that Fairfax County lost population was the 1820s when it was still farmland.

It’s good that Virginia is seeing economic growth elsewhere to stay on the plus side overall, but the struggles in our two biggest metros are concerning because their slowdown has revenue implications across the state. Our next governor will have to spend some time helping those two regions build a new economy.

Why Southwest Virginia should care about Northern Virginia

Rural school systems (and many urban ones) get most of their funding from the state government, but where does the state get that money? The biggest single source of state revenue is Northern Virginia — the region accounts for 42% of the state’s general fund revenue. That means localities in even the westernmost part of the state are tied to the economic fortunes of Northern Virginia. If its economy slows, that can show up in spending cuts (or local tax increases) elsewhere. The ODU report teased data it has coming that shows which localities in Virginia contribute the most to the state — and which ones take the most, based on their ratio to median household income. The biggest “giver” — Loudoun County. The biggest “takers” — Norton, Buena Vista and Petersburg. When the full data comes out later this year, you can read about it here.

Federal jobs aren’t the only ones we’re losing.

Over the past year, Virginia has lost jobs in four sectors. Not surprisingly, the biggest of those are federal jobs — 8,700 in all. What might be surprising is that these don’t account for the majority of the job losses — they measure out to 40.6% of the state’s job losses.

Professional and business services come in a close second — 8,000 jobs, or 37.3% of the total. Many federal contractors get counted in this sector. If we were to assume that all these are federal contractors, then maybe three-quarters of the state’s job losses are tied to federal reductions. That still leaves about one-quarter of the state’s job losses to be accounted for. Those come in two categories — manufacturing (4,100 jobs or 19.1%) and financial activities (600 or 2.8%). We’ll come back to those manufacturing job losses. 

The jobs we’re losing are in high-paid sectors, while many jobs in our fastest-growing sector aren’t.

While we don’t know the median pay of the federal workers who have lost their jobs, we know that the median income of federal workers is $117,962, according to federal data crunched by the Smart Asset site.

The fastest-growing job sector in Virginia is “health care and social assistance.” That covers a lot of different jobs with different pay rates. The Bureau of Labor Statistics says the median is $108,040 for health services managers, $61,900 for nurses and $34,800 for home health aides.

It would appear that, while Virginia is gaining jobs, we’re gaining them in lower-paid fields than the jobs we’re losing. This is a point that calls out for more investigation.

Trump wants to grow manufacturing jobs, but they’re continuing to disappear

Manufacturing jobs in the United States hit their peak in 1979 and have been declining ever since, a combination of some jobs going overseas and others were automated or became obsolete. They hit their lowest point since World War II in January 2010 as the nation came out of the Great Recession and, with the exception of the pandemic, haven’t changed much since. Biden saw modest growth in manufacturing jobs during his presidency, but their numbers were declining again during his final year in office. Trump has been unable to reverse those trends, despite implementing tariffs designed to discourage imports and boost domestic production (but which critics say will raise prices and actually slow manufacturing when other countries impose retaliatory tariffs on U.S.-made products).

The decline of manufacturing jobs in Virginia is not unique to the state; it’s part of a nationwide trend that has defied presidents (and governors) of both parties. We shouldn’t be surprised to see manufacturing show up as a declining sector, but this does have an disproportionate impact on communities that are more manufacturing-based, such as those across the western part of Virginia. While it’s natural to respond to candidates who offer hope, perhaps we should not be moved by candidates of either party who promise a manufacturing renaissance because there’s scant evidence that this is possible.

Traffic at the Port of Virginia has fallen every month since Trump took office

Trump’s tariffs have thrown international trade topsy-turvy. We don’t have a clear picture of their impact yet but we do have a sense of their impact so far.

West Coast ports have seen traffic increase, as some companies rushed to import goods from Asia before tariffs took effect. The Port of Virginia, though, has seen traffic decrease. A report compiled this summer by Cushman & Wakefield found that while Long Beach, California, saw volume increase by 9.6% from June 2024 to June 2025, the Port of Virginia saw volume decrease by -7.9%.

The ODU report presented to the Senate Finance Committee went into more detail. From January to July of this year, the dollar value of both imports and exports through the Port of Virginia has declined every month. 

While a decline in import values could conceivably be a good thing — it means we’re buying less from overseas — a decline in export values definitely isn’t. That means we’re selling less overseas, as well, as other countries either impose retaliatory tariffs of their own or simply seek other suppliers. Indeed, most months the biggest decline in value has been with exports, not imports. That’s not something confined to just Hampton Roads; that’s something that reaches into communities across the state where companies are making goods for sale overseas. This is why critics of Trump’s tariffs say they will ultimately hurt American manufacturing rather than help it. Of Virginia’s top 10 overseas customers, exports declined to nine of them, the ODU report says. Exports to France were down 39.2%, to China down 38.7%, to Brazil down 31.9%. The only increase was with Austria, exports there were up 7.7%.

Despite the slowdown in trade volume, revenue from tariffs has surged — from $8.2 million a month nationally when Trump took office to $29.5 million in August. That’s good for the federal treasury, but McNab reminded his listeners that tariffs are simply taxes with a fancy foreign name. These tariffs, he said, “represent one of the largest post-World War 2 tax increases on the books.”

Even with tariff revenue more than tripling, the federal deficit is increasing, the ODU report showed, and is higher under Trump than it was under Biden.

Virginia’s economic growth is now among the worst in the country

Through the first half of 2025, Virginia’s gross domestic product grew by just 1.7%, which ranks it 34th out of 50 states, according to the Weldon Cooper Center. That’s well behind the national average of 3.8% and well behind that of its economic rivals to the south: Tennessee’s GDP grew 3.1%, South Carolina’s 3.4%, North Carolina’s 3.7%. Virginia’s sluggish growth was more akin to Maryland, at 1.4% — of course, Maryland has also been hit by federal job cuts. (All these figures ultimately come from the Bureau of Labor Statistics.)

Here’s how abrupt Virginia’s economic slowdown has been. In 2024, Virginia was tied for the 6th fastest-growing GDP in the country, with a growth rate of 6.2%. Gov. Glenn Youngkin is loath to criticize President Trump, but Youngkin can rightly claim to have created the “rip-roaring” economy he promised — but Trump’s policies have tanked it. Those policies may someday prove useful for the nation, but for the time being, they have strangled the Virginia economy.

Whoever succeeds Youngkin will have to deal with the consequences. 

Coming Wednesday: What these reports say will happen next.