Arlington’s unemployment rate ticked up once again in July, continuing a months-long trend that has paralleled federal downsizing across the region.
The county’s unemployment rate stood at 3.5% last month, slightly above 3.4% in June and a major increase from 2.5% in July 2024.
As has been the case since the start of the year, views of the local, regional and state economy often split along partisan lines.
Where things stand now
Data released yesterday (Wednesday) by the federal Bureau of Labor Statistics and the Virginia Department of Workforce Development and Advancement show the economic challenges currently facing Northern Virginia.
A total of 64,885 Northern Virginia residents were reported actively seeking work in July, up 25% from 51,958 a year before.
In Arlington, the increase in those seeking work was significantly higher. Year over year, it rose 38.4% to 5,402, according to new figures.
The growth in Arlington residents in search of jobs was mirrored in Alexandria, which posted a 38.6% year-over-year increase. In Fairfax County, the rate was 27.8%, according to state data.
Across the D.C. metropolitan area as a whole, the number of those seeking jobs in July rose 16% year-over-year to 143,195, while the unemployment rate grew from 3.4% to 4%.
Despite the year-over-year increase in unemployment locally, not all signs were pointing in a negative direction.
Across Northern Virginia, total nonfarm employment stood at 1,632,400 in July, according to state data. That’s an increase, albeit a relatively small 0.6% one, from a year before, and was essentially flat month-over month.
Long seen as the economic engine fueling Virginia’s growth, the local region underperformed the commonwealth as a whole in year-over-year job creation in July. Statewide, seasonally adjusted nonfarm employment was up 0.8% to about 4.27 million.
Northern Virginia’s year-over-year job growth of 9,200 in July wasn’t even the largest in the commonwealth, as Richmond scored 12,100 net new jobs during the period.
A looming Old Dominion recession?
Mark Zandi, chief economist for Moody’s Analytics, puts Virginia — as well as Maryland and D.C. — on the list of jurisdictions at “high risk” for recession.
“Based on my assessment of various data, states making up nearly a third of U.S. gross domestic product (GDP) are either in or at high risk of recession, another third are just holding steady, and the remaining third are growing,” he said. “States experiencing recessions are spread across the country, but the broader D.C. area stands out due to government job cuts.”
Virginia accounts for about 2.7% of the nation’s GDP, and will play a role in whether the national economy slides into recession territory.
Zandi said that Southern states other than Virginia generally have the most healthy growth at the moment. “But their growth is slowing,” he said.
A fall in the rankings
Both Democrat and Republican leaders in Virginia have long looked to CNBC’s annual state-by-state business-climate rankings, where the commonwealth has been a dominant player for years.
In the 2025 results released last month, however, the Old Dominion slipped to fourth from its first-place perch of 2024. It was passed by North Carolina, Texas and Florida.
In its 2025 report, the media outlet noted the concern of University of Virginia economist Eric Scorsone.
“Virginia has been an economy, historically, that is pretty resilient,” Scorsone noted. “But now, we’re seeing something quite different, where Virginia is seeing some job losses, or at least job stagnation, whereas the nation as a whole is still creating jobs.”
Contrast that to the last pre-pandemic year, 2019, when Virginia stood atop the rankings. That year, CNBC analysts had this to say:
“It is Virginia’s fourth win, having previously taken the title in 2007, 2009 and 2011. The state has the nation’s best workforce, including the fourth-highest concentration of science, technology, education and math (STEM) workers. Strong school test scores, small class sizes and a wealth of colleges and universities make Virginia’s education system the best in the nation. And with Virginia Tech announcing plans to build a new campus adjacent to Amazon’s HQ2 focused on innovation, things could get even better.”
Beyer’s take on the situation
Rep. Don Beyer (D-8) fears that the most recent Northern Virginia economic data is not fully reflective of conditions he sees as more dire.
The latest jobs report “likely downplays the state of Virginia’s labor market, as a significant portion of the federal workers and contractors who have lost their jobs due to the Trump Administration’s purges of the federal workforce are not yet reflected in government labor statistics because their departures officially take effect later in the year,” Beyer’s office said in a statement.
“We have every reason to think it will get worse, as Trump’s purges of federal workers and contractors drive a surge in unemployment that may spread to other job sectors,” Beyer added.
He noted that, in July, only Mississippi had a greater unemployment-rate increase than Virginia’s rate of 0.8% year-over-year.
“In the past 50 years, Virginia’s unemployment rate has only risen this sharply six times, all preceding or during nationwide recessions,” the legislator said.
Beyer also expressed concern about data related to labor-force participation, which has declined throughout the year and now stands at just 64.9%, according to Bureau of Labor Statistics data.
The labor-force-participation rate measures the proportion of the civilian population age 16 and older that is employed or actively looking for work.
The governor’s view
The administration of Gov. Glenn Youngkin (R) disputes Beyer’s interpretation.
It pointed to federal data showing Virginia had 246,000 job openings at the end of June, up 8,000 from May and 14% higher than a year before.
The increase contrasts with the national picture, where the number of job openings has little changed.
“Virginia has jobs,” the governor said in a statement accompanying the latest batch of employment figures. “Employers are still adding jobs in key sectors.”
But the Youngkin administration also seemed to acknowledge employment shifts were taking place.
“Our focus remains on supporting jobseekers with training, upskilling and connections to in-demand opportunities,” the governor said.
Virginia Secretary of Labor Bryan Slater, who works for Youngkin, said he had confidence the state would hold its own.
“Virginia’s job market has proven its resilience time and time again,” Slater said.
One nearby jurisdiction taking action
Job vacancies across the commonwealth may be plentiful, as Youngkin says, but “the number of vacant jobs in Northern Virginia has decreased dramatically,” countered Fairfax County Board of Supervisors Chair Jeff McKay.
In a Fairfax discussion on Aug. 26, McKay said the current challenge was highly skilled — and highly paid — workers getting laid off and not being able to afford the cost of housing in the region.
Those employees are likely to consider leaving Northern Virginia as a result, he said.
Members of the Fairfax County Board of Supervisors took steps toward buttressing that jurisdiction’s economic-development efforts this week, while also criticizing state officials for inaction.
“Virginia’s economy is dependent in no small part on Fairfax County’s success,” McKay said. “Now is the time to double down. If Virginia is not going to step up … we will.”
At the meeting, Fairfax’s lone Republican office-holder, Supervisor Pat Herrity, broke ranks — to an extent — with his past support of Trump administration policies related to federal-government downsizing and economic policies.
“Things aren’t being done as smart as they could,” he said. “I think some of them need to be done, but they clearly aren’t being done in a smart way.”
Herrity supported Youngkin’s efforts to cut regulations to encourage economic development, and said his Democratic colleagues on the Board of Supervisors should take the same steps.
