Business & Government

Virginia’s Economy Looks Good now, but What About Tomorrow?

A report from the University of Virginia’s Weldon Cooper Center for Public Service shows Virginia’s economy will remain strong for the next year and even the next 25 years, but the economists admit all that could change.

João Ferreira, regional economist with the Weldon Cooper Center, says the new report can help students and parents review job market opportunities and prepare their school-year budgets. (Photo by Matt Riley, University Communications)

“Not all regions and not all states in the nation have similar economies and we decided it was important to provide a picture of how Virginia is doing compared with the national economy,” said João Ferreira, regional economist with the Weldon Cooper Center. “A quarterly report lets us look at particular aspects in Virginia and think in both the long term and the short term.”

The first installment of the new report was released this month with the next planned for April. The first report predicts the state’s gross domestic product will increase in 2025 by about 2.4%, which will outpace predicted GDP growth nationally. During the following decade, that growth should remain around 2.4% and then increase to 2.6% from 2034 to 2050.

Virginia State Annual Percentage Change Projections
	2023	2024	2025	2026	2024-2034	2034-2050
Employment	1.8%	1.7%	0.7%	0.3%	0.5%	0.4%
Real GDP	3.1%	2.7%	2.4%	2.2%	2.4%	2.6%
Population	0.6%	0.7%	0.7%	0.7%	0.7%	0.8%
Consumer Price Index	2.7%	2.7%	2.6%	2.7%	3.0%	3.2%
Unemployment Rate (average)	3.4%	3.5%	3.4%	3.4%	3.2%	3.1%

The report’s first installment shows predictions for Virginia’s economy until 2050. The quarterly updates will reflect changes due to unexpected outcomes. (UVA Weldon Cooper Center)

Statewide inflation should moderate with prices forecasted to remain stable in the short term with a consumer price index rise of about 2.6%. Inflationary pressure should remain stable until about 2028. Although employment in the state is expected to slow, unemployment should remain lower than the national average, the report predicts.

To make its predictions, the Weldon Cooper Center team created a model using more than 300 variables and equations while leveraging data from 30 different sources tailored to Virginia-specific estimates.

The report breaks the Virginia economic predictions into different sectors, including farm/agricultural, federal, state and local government, manufacturing, and professional/technical services.

Employment Growth in the Professional, Scientific and Technical Services

Virginia employment in professional, scientific and technical services jobs is expected to continue growing after increasing during the past 25 years. (UVA Weldon Cooper Center)

The Weldon Cooper Center provides leadership development, consulting and mediation services as well as unbiased research and data analysis to state and local officials, policy makers, community leaders, and the public.

The new report is designed for everyone, from government officials to students considering majors or future employment options.

“This can be useful for students and parents to help them to understand what to expect in the labor market and to understand expectations,” he said.

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“We’re building this forecast in a different way with representation of the different economic sectors. When we have a recession like the one in 2008, some sectors were hit really hard and others were not,” he said. “There are winners, there are losers and there are tradeoffs. We can look at trends using this tool knowing that not every sector behaves in the same way and see how they work together.”

But Ferreira said long-term economic predictions can be hit or miss and a variety of unpredictable disruptive events can happen, from pandemics to hurricanes. Revising the report every three months gives Virginia officials, communities, businesses and resident a heads-up on both short-term effects and long-term predictions.

He noted current federal efforts to reduce the number of government employees could have a significant impact on the state’s economy, but it is too early to predict those impacts. Those should be clearer by the April report, he said.

“The short term is where the value of this kind of report stands, because we can see different policies and different decisions being made, and probably we’ll see those impacts more clearly in April,” he said.

“You never know what may happen. Nobody could predict COVID-19, but about two or three quarters after it hit, you could see the economic models adjusting to the disruption,” Ferreira said. “You could predict how we would come out of COVID. That’s more or less what we are doing here.”