UVA report predicts unemployment to rise in Virginia

ALBEMARLE COUNTY, Va. (WRIC) -- Unemployment is expected to increase in Virginia in 2025 and 2026, according to the University of Virginia's (UVA) quarterly economic forecast.

UVA's Economic Forecast for Virginia is a model developed by the Weldon Cooper Center for Public Service that uses over 300 variables and equations, incorporating national data from Moody's Forecast and more than 30 diverse data sources to make estimates specific to the Commonwealth.

This quarter's report -- released in April -- found that Virginia's labor market is shrinking, with employment expected to decline throughout 2025. This reportedly goes against the national trend.

In January and February of 2025, the state has already seen a loss of nearly 8,000 jobs, and is expected to lose 24,000 more throughout the remainder of the year, according to the report.

The unemployment rate in Virginia will reportedly rise, climbing to 3.9% in 2025, as job losses accumulate and will reach its highest rate since 2021, the report said.

Although the labor market is shrinking, the report predicted that the Commonwealth's Gross Domestic Product (GDP), or the measure of value of the final goods and services produced, will continue to grow modestly, though still below the average in the U.S.

"Despite the labor market strain, Virginia’s GDP will remain in positive territory, driven by productivity gains and sectoral resilience—but growth will slow," the report said.

Inflation is forecasted to increase to 2.6% in 2025, slightly up from 2.5% in 2024.

In addition, the report said the economic slowdown is steeper and more persistent in Virginia than anticipated, with signs of continued weakness across multiple sectors.

The report can be viewed in its entirety below: