The commonwealth could be facing a slight recession, according to researchers at UVA’s Weldon Cooper Center for Public Service. The center released a new economic forecast report this week showing that Virginia’s 2025 employment numbers were lower than previously thought. And the state could see significant job loss this year, it predicts.
The university’s research and training institution says it offers “non-partisan, reliable services help policymakers and elected officials, students, governments, and community leaders in Virginia and beyond.”
João Ferreira, acting director at the Weldon Cooper Center, told Virginia Business that last year was one of the worst for Virginia’s economy since the COVID-19 pandemic. “We have to go back to probably the Great Recession to find a year like this,” he said.
Ferreira said Virginia’s unemployment rate was strongly affected by the loss of federal jobs. And he said the negative trend will continue.
“There were 10,000 jobs lost in Virginia in 2025, and what we predict is that in 2026, that number can be up to 17,000, now under the new economic conditions. For the first time, we are predicting the downturn is continuing,” he told the Richmond Times-Dispatch.
Government positions in the state, including federal, state, and local, declined by 6,000 (0.8%) in 2025. The center predicts they may decline by about 4,700 this year (0.6%). “There were sectors that actually underperformed even more than the federal government,” Ferreria told the Dispatch.
He also noted that the forecast reflects the inflation due to the ongoing conflict with Iran over traffic through the Strait of Hormuz. “We are predicting a contraction in the GDP (gross domestic product),” Ferreira said. Inflation has remained relatively high, “and this is mostly because of the situation of the Strait of Hormuz.”
Ferreira also said that this is challenging job market for college graduates. “What we see is low hiring, and this can be definitely a problem when it comes to new graduates.”
Feature image, vepar5/stock.adobe.com
