By Joy Vann
On October 7, seven days into the shutdown of the federal government, the presentation of Ϲ’s 26th annual State of the Region report drew more than 800 regional leaders to the Norfolk Waterside Marriott to hear the thoughts of the economists who wrote it.
Bob McNab, Ph.D., chair of the Department of Economics and director of the Dragas Center for Economic Analysis and Policy in the Strome College of Business, and Vinod Agarwal, Ph.D., professor and deputy director of the Center, addressed topics including defense, the Port of Virginia, tourism, tariffs, labor markets, consumer sentiment, inflation, unemployment and housing.
The first chapter of the report, “Change is the Only Constant,” notes that the rapid changes in trade, immigration, tax and expenditure polices make projections regarding the growth of the economy “an exercise fraught with uncertainty.”
In his opening remarks, Dr. McNab said that in a discussion of the economy, consumer sentiment must be analyzed, and he pointed out that as the country goes – Hampton Roads does not necessarily follow.
Nationally, Federal Reserve data showed consumer sentiment continued to decline and inflationary expectations increased in 2025. But in the same period, Hampton Roads saw a surge of residents saying economic conditions were excellent, according to consumer sentiment survey data from the Social Science Research Center at Ϲ.
Dr. McNab attributed that sentiment to the uptick in economic growth that the region experienced after the pandemic. While the region is in its fifth year of growth, Dr. McNab said that because of Hampton Roads’ ties to the federal government, that might not continue.
“We have lowered our forecast because of the headwinds of tariffs, a government shutdown and uncertainty about economic conditions,” he said. “In other words, there's good news, but the good news is conditioned about policies emanating from Washington, D.C. and their impact upon the region.”
Dr. McNab’s examination of the regional economy focused on data from different sources, and while the numbers are black and white, they do not consider the gray areas of perception. People’s views of the economy can switch depending on whether their party controls the White House.
“We have become increasingly polarized as a society, and that polarization is increasingly reflected in our views of how we think the economy is doing,” he said.
Regarding employment in Hampton Roads, Dr. McNab said that after positive job growth in 2024, the area experienced negative job growth in 2025 with losses in manufacturing and federal employment. That includes the first round of federal terminations but does not account for those who took the deferred terminations which went into effect October 1. Data including those losses will not be forthcoming until December, unless the federal shutdown impacts reporting.
The Port of Virginia saw a decline in trade volume in 2025, with exports to France, China and Brazil down by nearly 40%. The decrease in traffic at the Port was due in part to retaliatory tariffs by other countries and occurred at other ports across the country.
Dr. Agarwal addressed the shortage of housing in the region, noting that prices continue to rise while inventory remains low. He said that the lack of residential construction was largely caused by restrictive zoning regulations.
He also discussed international travel and legal immigration, noting that the United States saw fewer international students entering the country.
“If we decrease the flow of international students coming to the U.S., it’s also going to decrease the flow of expertise,” he said. “It also will reduce the flow of professional immigrants coming to the United States. That is going to have more consequences on economic development in the future.”
Dr. Agarwal addressed the hotel industry and said that it had recovered from pandemic lows by charging higher rates. He said the industry faces the challenges of increasing demand for rooms and competing with Airbnb and Vrbo, which are here to stay.
In recognition of the presentation’s landmark anniversary, special guest James V. Koch, Ph.D., former president of Ϲ and an esteemed economist, offered a reflection on its impact. He gave a brief history of the event, which first drew 30 people, and grew to fill a ballroom with dignitaries, politicians and business leaders from throughout the region.
Throughout its history, the State of the Region report’s writers have called attention to topics before others did. Regarding sea level rise in the early days, he remembered encouraging the naysayers to just check the tide point gauge at Sewells Point. He recalled the report once predicted Eastern Virginia Medical School and Ϲ would see benefit from integration, which came to fruition in July 2024.
The State of the Region Report also contains chapters about how the Baby Boomer generation affects life in Hampton Roads, the outward migration of workers and the impact of Norfolk International Airport.