One in seven jobs in Virginia is directly or indirectly linked to the federal government. Cuts to the federal workforce and government spending will mean a significant hit to Virginia’s economy this year, according a new economic forecast.
The University of Virginia’s Weldon Cooper Center for Public Service forecasts Virginia will lose 32,000 jobs this year because of federal government cuts, economic output will slow and the unemployment rate will rise to 3.9% this year and as high as 4.7% in 2026.
Virginia’s current unemployment rate is 3.2%.
Cuts directly tied to government jobs and spending will have an inevitable spillover effect, the report said.
“We have several hundred thousand people in Virginia who work for contractors with the federal government, so they are not federal employees,” said Eric Scorsone, executive director at the Cooper Center. “Those companies could potentially be laying people off. And ultimately that spills over to other industries like retail, restaurants.”
The report, one of several forecasting a slowing regional economy and job market, said policymakers need to address Virginia fallout from federal government actions now. One of the biggest risks, according to Scorsone, will be keeping those personally affected by cuts from leaving the region.
