Virginia is projected to lose jobs in 2025 and see virtually no employment growth in 2026, according to a new forecast by the University of Virginia’s Weldon Cooper Center.
At a Glance
- Virginia expected to lose about 11,700 jobs by the end of 2025
- Net gain of only around 300 jobs projected for 2026
- Unemployment forecast to rise from 3.6% in July 2025 to 4.7% by June 2026
- Federal layoffs and tariffs identified as key drivers of downturn
Forecast Signals Trouble
The Weldon Cooper Center projects that Virginia will shed roughly 22,500 jobs in the second half of 2025, leading to an overall decline of about 11,700 jobs by year-end. This downturn reverses earlier growth trends and signals economic weakness tied to delayed federal workforce reductions and tariff effects.
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Looking ahead, 2026 offers little relief. The report estimates that the state will add only about 300 jobs over the course of the year, effectively flat growth. Economists point to the heavy dependence on federal employment and contracting in Northern Virginia as a structural vulnerability, making the state more exposed to federal cuts and policy shifts.
Rising Unemployment
Virginia’s unemployment rate has risen steadily for seven consecutive months, reaching about 3.6% in July 2025. The Weldon Cooper Center projects that the rate will continue climbing, hitting 4.7% by June 2026. That would mark the state’s highest unemployment since early 2021.
The April version of the forecast had already anticipated significant weakness, with an expected loss of around 32,000 jobs in 2025 and more than 9,000 cuts concentrated in government employment. While the August update reflects a somewhat smaller decline, the outlook remains negative across key sectors.
Political and Business Reactions
Political leaders have seized on the forecast as evidence of the challenges ahead. Abigail Spanberger, the presumptive Democratic nominee for governor, cited the report in emphasizing the need for stronger economic planning. Business groups in Northern Virginia have also expressed concern, as reductions in federal contracts threaten ripple effects across the local economy.
Meanwhile, CNBC’s latest “Top States for Business” ranking placed Virginia in fourth position, its lowest ranking since 2018. Analysts cited job losses, sluggish growth, and reduced competitiveness as key factors in the decline. The combination of federal workforce cuts, tariff impacts, and structural reliance on government employment underscores the fragility of the state’s economic outlook.
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