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New UVA study shows growth of Virginia's economy slowing
A new University of Virginia study says growth across the Commonwealth is slowing, thanks in large part to the impact of DOGE. That new study says Virginia’s economy is the softest it has been since the pandemic, and researchers say they have the numbers to prove it.
WASHINGTON - New information is showing that the overall health of Virginia’s economy isn't looking good.
A new University of Virginia study says growth across the Commonwealth is slowing, thanks in large part to the impact of DOGE.
What we know:
That new study says Virginia’s economy is the softest it has been since the pandemic, and researchers say they have the numbers to prove it.
The report says Virginia’s economic growth this year will be 0.3 percent, down from 1.5 percent last year, with a prediction of higher growth next year at about 1.6 percent.
The University of Virginia’s Weldon Cooper Center for Economic and Policy Studies says contributing factors to the slowdown include widespread federal workforce reductions, an increasing unemployment rate and weaker job growth and a cooling housing market with prices dipping slightly.
"I would say that the biggest challenge that everyone faces right now is how to predict — even for us, how to forecast — but how to anticipate what to do in an environment that is constantly changing," said João Ferreira of the University of Virginia Center for Economic and Policy Studies. "We started doing this forecast two weeks ago, running the simulations, and in one week everything changed and now we are involved in the war with Iran. That’s the kind of thing that affects these forecasts. That’s why we do them quarterly."
"Manufacturing continues to lose jobs — more than 7,000 jobs were lost in 2024," Ferreira said. "That’s the trend we’re seeing continue in 2025 and, in a certain way, during the first quarter of 2026. We are forecasting that by the end of 2026 the Virginia economy will be recovering and returning to a trajectory where it grows slightly more than the national average."
Local perspective:
FOX 5 wanted to get a sense of how local businesses are feeling about the report and whether it rings true.
We stopped by Vola’s Dockside Grill and Hi-Tide Lounge in Old Town. It is one of nine area restaurants owned by Alexandria Restaurant Partners.
Scott Shaw, one of the founders, says the UVA numbers sound about right.
"I think that tracks with where we ended up last year. So up a small bit — we feel that’s pretty good given what was going on in D.C., and DOGE, and the government shutdowns in the fall with the softening of the economy," Shaw said. "What we’ve seen is that people still want to go out and have a fun time. I think they’re just being more careful with their discretionary spending and maybe more selective — where they’re going and how often they go out."
"I think last year was a wake-up call for us as a region that the bubble we live in is not impermeable," he said. "We are affected like other parts of the country by government shutdowns — and more than other parts of the country. You have to bring your A game every day. When somebody walks in that door, they’ve made a decision to go out and eat with you that night. You have to deliver on hospitality and service. The value equation is not just about price. It’s about whether that experience is worth reaching into your wallet for at a time when money’s tight."
While the UVA report says the economy in the commonwealth may begin to rebound toward the end of the year, Virginia is poised to lose more than 10,000 jobs this year, many of them in manufacturing.