University of Virginia experts predict Virginia’s economy will see slight growth by the end of 2026, even though the state is expected to lose more than 18,000 jobs.
According to an Aug. 31 quarterly forecast from UVA’s Weldon Cooper Center for Public Service, the state’s economy is expected to grow by 0.5% in 2026, an improvement from May’s forecast of a slight contraction.
But Virginia is projected to lose approximately 18,050 jobs in 2026, the second straight year of job losses.
“Virginia’s labor market has remained uneven through the first half of the year. Employment declined in January and February, rebounded in March, weakened again in May and increased in June,” said João Ferreira, acting director of the Weldon Cooper Center’s Center for Economic and Policy Studies and an author of the report. “Although the fluctuations represent an improvement from the pronounced weakness of late 2025, they have not established a sustained recovery.”
Many of those lost jobs are related to federal government cuts in 2025 and early 2026, according to the report. But some employment sectors that performed relatively well in 2025 are losing momentum in 2026, including construction, professional services, manufacturing and administrative support sectors, which are expected to decline.
João Ferreira is acting director of the Weldon Cooper Center’s Center for Economic and Policy Studies and an author of the report. (Photo by Matt Riley, University Communications)
Other findings in the report include:
- Average home prices in the state are projected to rise by $2,000, from $447,000 in 2025 to $449,000 in 2026. Prices are expected to increase modestly in 2027.
- Virginia’s inflation remains below the national forecast for 2026. Prices are projected to rise by 2.6% in 2026, compared to the national rate of 4%.
- Healthcare services will create an additional 4,400 jobs in 2026, about half as many as were added in 2025.
Despite job losses in the economy, Virginia’s unemployment rate is projected to remain near 3.9% through late 2026, based on the number of people who give up looking for work and are no longer counted in the workforce.
The workforce declined by nearly 68,000 from early 2025 to June 2026, a decrease of about 1.5%. Between January and June alone, the labor force fell by approximately 38,000 people.
“Although the available data do not identify the precise reasons for this decline, its scale and persistence are unusual relative to Virginia’s recent prepandemic experience,” the report states. “It may reflect a combination of population aging and retirement, migration to other states, and reduced participation among individuals facing limited employment opportunities.”
