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By Joy Vann

���Ϲ�’s 10th annual , produced by the Dragas Center for Economic Analysis and Policy, presents positive news about Virginia’s economy, citing declining inflation, rising consumer spending and plenty of jobs to fill.

However, possible new federal policies regarding tariffs on products from Mexico, Canada, Europe and China, immigration plans and the size and location of the federal workforce, make predicting outcomes for 2025 tricky.

The SOC analyzes Virginia’s economy and includes information about economic progress in Hampton Roads, Northern Virginia, Richmond, Roanoke and Lynchburg.

Robert M. McNab, director of the Dragas Center and lead author of the report, said while inflation has declined over the last year, consumer perception about the state of the economy remains dark. He noted that though average wages for workers have increased faster than inflation, the high cost of common commodities like bread and milk are more noticeable than wage increases.

On Virginia’s job front, things are solid. A record number of residents were employed this year, the unemployment rate remained below 3% and there were more available jobs across the state than Virginians available to fill them.   

McNab pointed out that while there is a lot of good news to report, the high cost of housing remains problematic due to a shortfall of building starting after the Great Recession. Twenty five percent of single-family homeowners and 50% of renters are cost-burdened, meaning that they spend more than 30% of their income on housing. Because it’s estimated that approximately 40% of new housing costs are related to rules and regulations, the professor pointed out that reducing the barriers to building housing could provide a solution.

“Building more housing at any price point increases supply and reduces price pressures,” McNab said.   

Regarding the imposition of tariffs—which are taxes on goods at the port of entry—McNab said consumers will pay the price. Another result of tariffs might be a decrease in trade through the Port of Virginia because of retaliatory tariffs by other countries. Outside of tariffs, it’s been widely reported that the next administration will consider reducing or relocating federal workers. That, McNab said, would have negative consequences on employment, incomes and GDP growth. Furthermore, elimination of federal jobs in Virginia would put people out of work because there aren’t enough private sector jobs to absorb them.

Given the upcoming policy uncertainties, McNab said, “The best course of action for Virginia is to invest in itself, focus on building more housing and remain fiscally responsible.”

The 2024 State of the Commonwealth Report has five chapters including:

• Virginia’s Economy Grows, Will Consumers Remain Unhappy?
• Virginia’s Metropolitan Areas: Growth, Challenges, and the Road Ahead. 
• Does it Still Pay to Attend College in Virginia? 
• Rising Disability Rates (or not): A Sign That We Care or an Epidemic Problem in The Commonwealth? 
• An Older Commonwealth, a Better Commonwealth? 

For more than two decades, the Strome College of Business Dragas Center for Economic Analysis & has produced economic research reports as a service to decision-makers and thought leaders in Hampton Roads, inserting data into discussions that affect residents’ daily lives. The 2024 State of the Commonwealth Report is available .