President Donald Trump’s policies around tariffs and reducing the federal workforce could slow growth and send inflation climbing ever higher, but the details of impacts to the Hampton Roads economy still remain unclear, a region economist said Thursday.
“What does all of this mean? A lot of uncertainty ahead,” said Nikki Johnson, regional economist with the Hampton Roads Planning District Commission.
Johnson told the commission the regional economy is very exposed to Trump’s desire to cut the federal workforce. With around 51,769 federal employees, Hampton Roads is the third-largest metro area employer of federal workers, behind only Washington, D.C., and New York., Johnson said.
Cutting federal workers will also have a larger economic impact than if the cuts were from the private sector, Johnson said, because they make significantly higher salaries on average. Hampton Roads federal workers make an average of around $131,000 annually, compared to an average of just $51,000 for private sector workers, according to the Planning District Commission.
“What this means is that for every federal civilian job that we cut, you would have to create two new private sector jobs to maintain the same level of total compensation within the region,” Johnson said.
Johnson said the United State has around 2.3 million federal civilian employees, with about one in three of those working in the U.S. Department of Defense. Another 19% work in the Department of Veterans Affairs.
Both of those agencies have been targeted for cuts. The Defense Department aims to cut between 5% to 8%, or about 50,000 to 60,000 workers, from its workforce, according to Associated Press reporting. The Department of Veterans Affairs plans to reduce its overall staffing levels by 72,000 workers. Some employees have already been cut from the Hampton VA Medical Center, though another VA outpatient clinic opened in Chesapeake this week.
Trump’s chaotic tariffs policy could also impact business at the Port of Virginia, Johnson said. Though he has paused tariffs with many countries, Trump has hit China with 145% tariffs, implemented a baseline 10% tariff and established 25% tariffs on imported automobiles, aluminum and steel.
Johnson said the Port of Virginia imported around $9.2 billion in goods from China in 2024, and exported another $2.9 billion in merchandise to China during the same time period.
Johnson said the tariffs have also caused the biggest drop in consumer sentiment since the 2022 inflation shock. Additionally, she said the latest Blue Chip Economic Indicators forecast was predicting higher inflation and slower growth for the U.S. economic, which is sometimes called stagflation.
Trevor Metcalfe, 757-222-5345, trevor.metcalfe@pilotonline.com