Don’t Bet Against Virginia: Why the State’s Economy Is Stronger Than the Headlines Suggest and Progressives Shout

If you only read the headlines, you might think Virginia’s economy is teetering on the brink. A recent Cardinal News story declared that the Commonwealth’s GDP growth has fallen from 6.2 percent to 1.7 percent, and touted warning signs spelled out in “three new (economic) reports” that claim to show serious trouble ahead. Setting aside the fact that one of those three reports has had to revise its gloomy estimates upward after Virginia outperformed every metric they cited as reported by TJI’s Steve Haner, the implication from these reports is that Virginia’s economy is sliding backward.

Virginia’s reality tells a very different story.

Yes, GDP growth slowed this year. But that statistic, stripped of context, gives a distorted picture of Virginia’s true economic health. The 6.2 percent figure the article celebrates was a short-term rebound after pandemic disruptions and included massive federal infusions; it was never sustainable. A return to 1.7 percent growth isn’t collapse — it’s normalization far more in line with historic levels. The deeper truth is that Virginia’s economy is restructuring in ways that will strengthen, not weaken, Virginia’s long-term prosperity.

Beyond the GDP Headline

GDP is a lagging indicator; it measures what has already happened, not what is coming next. And what’s coming next for Virginia is enormous. Since Governor Glenn Youngkin took office in 2022, the Commonwealth has secured more than $125 billion in new private investment, a record pace according to the Virginia Economic Development Partnership and well above the $81 billion gained under Governor Northam. Those dollars represent new plants, new jobs, and long-term tax revenue that will materialize over the next decade.

At the same time, Virginia has become a magnet for advanced manufacturing and data-center growth. Eli Lilly’s $5 billion pharmaceutical plant in Goochland County is just one example of the kind of high-wage, high-skill investment the state is landing. Loudoun County’s booming data-center corridor– now the largest in the world — continues to expand, creating construction jobs today and technology jobs tomorrow.

Diversification is Not Decline
The critics are right that federal employment is shrinking in Northern Virginia and Hampton Roads, but that’s precisely why Governor Youngkin has worked to diversify beyond government dependency. It’s a deliberate transition, not a crisis. A transition that will ultimately make Virginia much stronger and more independent!

And it’s not a coincidence where the job losses are most pronounced. The regions struggling most, Fairfax, Arlington, Alexandria, and parts of Hampton Roads, also have some of the highest local taxes, strictest regulations, and most progressive local policies in the state.

These more progressive jurisdictions often add their own environmental rules, zoning hurdles, and business mandates on top of state requirements, driving up costs and discouraging private investment. Businesses that might once have located there (and thus offset losses in government jobs and investment in those areas) are now choosing counties such as Goochland, Chesterfield, Prince George, and Pittsylvania — places that keep taxes lower, permit processes faster, and attitudes toward enterprise friendlier.

The economic story here, that Cardinal News misses, isn’t one of statewide decline, but of local policy divergence: pro-growth regions are booming while high-cost, high-regulation jurisdictions stagnate.

New investment in manufacturing, logistics, and life sciences is offsetting losses in federal contracting. Virginia’s economy is no longer held hostage to Washington’s budget cycles — a strategic shift that will make the state more resilient as the federal government stumbles through this shutdown and begins to tackle its massive deficit (if it ever does).

And the claim that we’re only adding “low-wage” jobs simply ignores the numbers. These new facilities are in sectors that pay well above the state average and are increasingly located in lower cost of living areas. The Eli Lilly, ABB, and Amazon Web Services expansions all bring salaries far higher than retail or service work.

A Business Climate Built for Growth
What explains Virginia’s ability to attract these projects when other states are stalling? Policy matters!

Governor Youngkin’s conservative economic agenda (“Youngkinomics”) — lower taxes, fewer regulations, shovel-ready sites, and a focus on workforce readiness — has made the Commonwealth competitive again. Raising the standard deduction, streamlining permitting, and cutting red tape have sent a clear signal that Virginia is open for business.

Business Facilities magazine named Virginia its 2024 “State of the Year.” CNBC ranked it #4 nationally for business climate (which the progressives claim is a sign of weakness). And the state’s Talent Accelerator Program was rated #1 in America for customized workforce training. Those are not the hallmarks of a state in decline.

The Transition Phase
So why the softer GDP number? Because we’re in a transition phase, shifting from federal dependence to private-sector growth. That kind of rebalancing is bound to produce short-term fluctuations. The right question isn’t “Why did GDP slow this quarter?” but “What is Virginia building for the next ten years?”

By every forward-looking measure that matters most, like investment, job pipeline, and site readiness, Virginia’s foundation is strong. The policies that encourage free enterprise are working, even if the GDP charts haven’t fully caught up yet. No doubt there are still federal headwinds to cut through (tariffs, in particular), but acting aggressively to promote Virginia is paying off and forcing economic forecasters to “correct” their dire predictions.

Don’t Bet Against Virginia
The alarmist narrative of decline sells clicks, feeds the gloom of progressives who are clamoring for votes, and lays the groundwork to cast blame if the policies of the next administration are not as successful — but it misses the bigger picture. Governor Youngin’s conservative reforms, disciplined fiscal management, and record-setting business recruitment have positioned Virginia to lead the region, if not the nation, in private-sector growth for years to come. 

The real question is whether the next Governor will build on the Youngkin success, or tax, spend and regulate the Commonwealth back into federal dependence.  

Derrick Max is the President & CEO of the Thomas Jefferson Institute for Public Policy and may be reached at dmax@thomasjeffersoninst.org