BYLINE: Joao, Ferreira and Terry Rephann, Weldon Cooper Center for Public Service
New Economic Forecast for U.S. and Virginia Shows Weaker Economy and Job Market
Newswise — UVA’s Weldon Cooper Cener for Public Service will publish its second quarter economic forecast for Virginia and the U.S. on Tuesday, May 26 at 8:00am ET. The latest forecast includes the following key findings for the U.S. and Virginia. Prior forecasts can be found on Weldon Cooper’s website. The report’s authors will discuss the findings at a virual media roundtable on Wednesday, May 27 at 9:00am ET – reporters can register via UVAExperts@virginia.edu.
U.S. Economy Highlights: A Downward Correction
The nation finds itself in a different economic environment than in February, when the outlook was a relatively positive GDP expansion with weak job growth, moderate inflation, and expectation of improved financing.
The latest baseline is less favorable: national employment growth is slightly weaker, inflation is higher, energy prices are up and the path of interest-rate relief is more limited. In April, Moody’s projected U.S. real GDP growth of 2.0% in 2026 for the second year in a row.
Employment growth remains limited, at 0.2% in both years, while prices are expected to rise by 3.3% in 2026 before moderating to 2.5% in 2027. The national unemployment rate is projected to remain close to 4.5% through the forecast period.
Virginia Economy: Weaker Since February’s Forecast
Virginia’s revised employment data show a more dramatic 2025 slowdown than previously understood. Employment data shows that Virginia lost net 10,400 jobs in 2025 (more than 30k in the second half of the year), and the unemployment rate is projected to rise further.
The forecast for Virginia has weakened since February. The February forecast projected a 0.2% decline in employment in 2026. The May forecast now projects a 0.4% decline. In absolute terms, this means Virginia is now expected to lose 17,800 jobs in 2026 — an additional loss of about 7,500 jobs.
Virginia is forecast to experience its weakest point in 2026 before returning to growth.
Inflation in Virginia remains lower than the national rate, but price pressure has not fully normalized.
Housing activity remains constrained, with rent growth continuing and permits declining.
About the Forecast
The Weldon Cooper Center for Public Service developed this economic forecast as a useful resource for the good of the Commonwealth. The Cooper Center is committed to making these data accessible to policymakers, industry representatives, and community leaders across Virginia, equipping them with the information needed to navigate a rapidly changing economy and drive sustainable growth.
Beyond tracking Virginia’s economic trends from 2024 to 2050, this advanced model places these trends within the broader national context, helping civic leaders compare the state’s economic trajectory with the rest of the country.
About the Model
This comprehensive model incorporates over three hundred variables and equations, leveraging national data from Moody’s Forecast as well as more than thirty diverse data sources to tailor Virginia-specific estimates. Key inputs include data from the Bureau of Economic Analysis (BEA), the Bureau of Labor Statistics’ (BLS) Quarterly Census of Employment and Wages (QCEW), Virginia Realtors, the Virginia Department of Taxation, the U.S. Census Bureau, the Energy Information Administration (EIA), and the Cooper Center’s demographic data. The model is designed to evolve over time, incorporating new data sources and refining sector-specific insights to maintain its accuracy and relevance.
For more detailed information about the model, see the short appendix at the end of the report.
Quarterly Cycle
Each quarter, the Cooper Center’s Economic Forecast updates major economic trends and highlight a specific sector shaping Virginia’s economy. Featuring different industries each quarter captures the evolving dynamics of the state’s economy and provide actionable insights. The report always focuses on key indicators such as employment growth, inflation, unemployment rates, GDP expansion, and government employment.
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