More economic data from the federal government and local economists indicates Virginia may be part of a slowing economy.
The US Commerce Department said on Wednesday in an advance estimate that the gross domestic product decreased by 0.3%, mostly driven by an increase in imports and a decrease in government spending.
The numbers are for the national economy at large and not Virginia specifically, which has recently seen mixed economic indicators. But the University of Virginia’s Weldon Cooper Center said earlier this week in a forecast that it saw the commonwealth’s economy “lagging” in 2025.
“The unemployment rate in Virginia will rise as job losses accumulate and will reach its highest rate since 2021,” wrote its authors. They also wrote that while the state economy will grow, it will lag behind the US’s GDP growth. (The report was released before the federal advance estimate and did not include those numbers.)
In a statement, a spokesperson for Gov. Glenn Youngkin said Virginia is better insulated from federal cuts than the District of Columbia or Maryland because of the high concentration of defense industry jobs, citing rating agencies’ assessments.
“Virginia’s economy remains strong and that was reaffirmed in the decision by Moody’s to reaffirm Virginia’s AAA bond status just a few weeks ago,” said Peter Finocchio, Youngkin’s press secretary. “The Youngkin Administration will continue leading to make sure Virginia’s economy remains resilient while helping impacted workers launch new and promising careers here in the Commonwealth.”
While those numbers look backward in time, economic uncertainty for businesses featured prominently in a more forward-looking publication released last week by the Federal Reserve Bank of Richmond.
VPM News spoke to Joe Mengedoth, a regional economist with the bank, about the business survey Beige Book last Thursday. The interview was conducted before Wednesday's GDP data came out. It also occurred before a media quiet period enforced by the Fed in the days preceding and immediately after meetings where it decides whether to change monetary policy.
“What we're hearing from a lot of businesses is that, due to the high level of uncertainty right now, that they're just not sure how to make business decisions,” said Mengedoth. “If they're not sure about how the economy is then they might start pulling back on certain things.”
The commerce department’s advance estimate also showed a slight increase in prices.
Two other publications by the Richmond Fed said that in April manufacturing and service activity both slowed in the area the bank oversees, which also includes the Carolinas, Maryland and West Virginia.
Mengedoth did say that data have been recently trending in directions that signal a strong economy.
“We've seen some negative numbers the last couple of months in both manufacturing and non-manufacturing. But you know, before that, we're largely hearing that this is like a position of strength,” he said. “We've seen solid growth for a while now, and even as things might be softening now, it's from a good level.”
