An economic research team at the University of Virginia’s Weldon Cooper Center for Public Service is projecting that growth in the state has been slow but will increase over the next two years.
“The Commonwealth continues to underperform the national economy, where real GDP is projected to grow by 2.1 percent in 2026,” reads the first bulleted point of the executive summary.
Virginia’s gross domestic project increased by 0.9 percent in 2025 and the forecast for 2026 is 0.5 percent.
The report also projects that over 18,000 jobs will be lost this year, the second decline in a row. Sectors affected include Administrative Support, Accommodation and Food Services, Manufacturing, and Professional Services. The Trump administration’s successful push to shrink the size of the federal government is considered a factor.
Jobs in Health Care Service are expected to slow.
“Health Care added 2,800 jobs between December 2025 and June 2026 and is projected to gain 4,400 jobs over the full year,” reads page 12. “Although this remains a positive contribution, it would represent the sector’s weakest annual performance of the past five years and less than half the 9,100 jobs added in 2025.”
Some sectors are expected to grow slightly such as Wholesale and Retail, Transportation and Warehousing.
Another sector is Government, but not all levels are on the same trajectories. There was a loss of 22,000 federal jobs in 2025, but state and local government increased. From December 2025 to June 2026, the state added 1,700 jobs while local governments added approximately 9,400. The report is cautious about making a projection.
“Future government employment will depend heavily on the broader economic environment and decisions affecting state or federal employment and spending,” reads the report. “While the improvement observed during the first half of the year is encouraging, it does not yet establish a durable change in direction.”
The unemployment rate has been trending upward from 2.9 percent in mid-2024 to 3.6 percent at the end of 2025. The number increased to 3.8 percent in the first few months of this year. The report notes the rate will likely not increase too much higher because of a shrinking labor force.
“Individuals are classified as unemployed only when they are without work, available for employment, and actively looking for a job,” reads page eight of the forecast. “When someone retires, becomes discouraged and stops searching, or otherwise withdraws from labor-force participation, that person is no longer counted as unemployed.”
The report also addresses the housing market.
“Average house values are projected to increase by 1.1 percent in 2026, while rents rise by 3.4 percent and home sales decline by 1.8 percent,” reads the fifth bulleted point in the summary. “Stronger-than-expected permitting activity may support greater housing availability in the future, but elevated mortgage rates and weaker state economic activity continue to limit the market.”
Inflation is up in Virginia, but slightly below the national rate. The cost of all goods and services in Virginia increased by 2.4 percent in 2025 and the overall rate for 2026 is projected at 3.1 percent for this year.
For more information and to download the report, visit the Weldon Cooper Center’s website.
Before you go: The goal of Town Crier Productions is to increase awareness about what is happening at the local, regional, state, and federal government levels. Please share the work with others if you want people to know things. Paid subscribers cover the cost of conducting research for this article which was originally published in the September 3, 2026 edition of Charlottesville Community Engagement. You can either subscribe through Substack or make a charitable contribution.
Discover more from Information Charlottesville
Subscribe to get the latest posts sent to your email.
