Virginia’s economy is on track to contract by the end of 2025, and new numbers from the U.S. Bureau of Economic Analysis showed the U.S. economy declined in the first quarter of 2025. That's according to a pair of new reports released this week.
Here’s economist Eric Scorsone with the University of Virginia's Weldon Cooper Center speaking to a quarterly economic forecast for the Commonwealth the center released this week.
“We project the state of Virginia to lose about 30,000 jobs over the course of 2025 primarily due to federal government cuts,” Scorsone said.
If the job losses come to pass, that would put Virginia in a mild recession.
Nationally, the U.S. economy declined 0.3 percent in the first quarter of 2025. That’s a far cry from 2.4% growth in the last quarter of 2024.
“Business investment and consumer spending is slowing down, but not negative. Imports have surged and that has increased the trade deficit, which is actually a negative on GDP,” Scorsone said of the national numbers. “That's one of the big reasons GDP came down.”
Governor Glenn Youngkin shrugged off the bad news. In a statement sent to Radio IQ Wednesday, his office said, “Virginia’s economy remains strong,” and pointed to a likely increase in military spending that would offset federal job losses in the Commonwealth.
Youngkin also pointed to cash reserves he built into the state’s budget that he said could absorb as much as a three percent economic decline in the state.
As for President Donald Trump, he took to social media early Wednesday to blame the bad economic news on former President Joe Biden saying, “tariffs will soon start to kick in, and companies are starting to move into the USA in record numbers."
Scorsone was less sure about tariffs as a long-term strategy.
“We’ve been reshoring for several years now, so I don't know for sure. It's very hard to say how much of that will happen in the short term,” he said of former President Joe Biden’s efforts like the CHIPS Act and other measures, which saw some manufacturing come back to the states.
“We don't know how long these tariffs will be on or how people are going to respond to them,” he added. “This is a very unprecedented kind of a strategy.”
Virginia Beach Democratic Delegate Alex Askew was less thrilled at the idea of more tariffs. He said they’d likely increase costs for Virginians.
“Every dollar spent on higher prices is a dollar not spent at local restaurants, local daycare or a local small business trying to survive,” Askew warned.
Democratic gubernatorial hopeful Abigail Spanberger was similarly less optimistic about Trump's tariff plans.
“Virginia’s leaders have a fundamental responsibility to put Virginia first — not swear an unfaltering allegiance to DOGE and President Trump at the expense of Virginia's economic strength,” a spokesperson for her campaign told Radio IQ. "Virginians deserve a governor who will always put them first."
Requests for comment on both reports sent to Republican gubernatorial candidates Winsome Earl-Seares were not returned.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
