Richmond Fed brief: federal hiring, contracts and tariffs pose mixed risks to Virginia economy

Senator L. Louise Lucas, chair of the special joint subcommittee on federal impact of resources, convened the panel in Richmond for a briefing from Sonia Waddell of the Federal Reserve Bank of Richmond on how federal workforce changes, contract spending and trade policy may affect Virginia.

Waddell told the subcommittee the national economy has remained "remarkably resilient" even as some indicators show moderation, and she cited the Federal Open Market Committee median projection of 1.7% GDP growth for 2025 as a baseline. She said payroll employment gains have slowed toward levels that more closely match working‑age population growth and that some high‑frequency indicators show softening in hiring and retail activity.

The presentation focused on three channels by which federal actions could affect Virginia: direct federal employment and federal contractor activity, federal grants and transfers to state and local governments, and broader national policy risks such as tariffs that affect trade and supply chains. Waddell emphasized that the structure of Virginia’s economy — notably large federal employment and high federal contract receipts concentrated in Northern Virginia and Hampton Roads —…