The Hampton Roads economy is a study in contradictions — a mixture of good news and challenges that we must face as a region to move forward, a local economist said on Tuesday.
“We estimate that we expect in 2026 that the nominal — not adjusted for inflation — gross domestic product in the region will approach $150 billion, a record,” Robert McNab, economics professor and director of Old Dominion University’s Dragas Center for Economic Analysis and Policy, told a crowd of more than 700 at the annual State of the Region address at the Norfolk Hilton The Main.
This shows that the region’s economy is growing, McNab said.
“In fact, we project growth of approximately 1.6% this year, down slightly, but still positive,” he said. “It’s the first time the Hampton Roads economy has thrown together six years of growth since the turn of the century.”
But what’s the other shoe to drop?
The civilian labor markets — nationally and at state and regional levels — show a different story, he said. His presentation data showed that the civilian workforce in Hampton Roads dropped from roughly 880,000 people at the start of 2025 to 863,000 this August, down nearly 17,000 workers.
“There’s fewer in the region at work or actively looking for work,” he said. “We see employers as well report there are fewer jobs in Hampton Roads than there were just a year ago.”
The greatest decline in jobs in the region stems from the loss of those with the federal government, he added.
On to some good news, McNab said the Port of Virginia — one of the pillars of the region’s economy — is outperforming other ports.
“We saw a drawdown in traffic in 2025 — inbound containers were down 7.5% and outbound containers were down 9.3%,” he said. “We have not fully recovered from the tariff shock of 2025, but we’re on our way.”
The tourism industry — another robust pillar of the area’s economy — brought in $7.2 billion of direct spending in the region in 2025, he said.
And the ripple effect of that spending? The actual impact of tourism in Hampton Roads is somewhere between $12 billion and $15 billion — or 10% of the local economy, McNab said.
But there are challenges, too.
The growth of artificial intelligence is at the forefront because of the level of infrastructure investment that is occurring with hyperscalers and data centers — estimated to be the greatest private sector peacetime investment in U.S. history, he said.
And housing supply tops the list of problems that leaders in Hampton Roads must focus on as a primary economic development tool to mitigate rising rents and home costs, McNab said.
“We need to consistently bring more supply of housing — single family and multifamily to the market,” he said, “because if we restrict the supply by not building, the price of housing becomes increasingly unaffordable.”
Housing is the one economic development solution that we have local control over, he said, noting we do not control other policies including trade, federal spending, national security, and minimum wage.
“Our discussion should be less about affordable housing or workforce housing,” McNab said. “Just put more things in the ground. You start working on that problem and then a bunch of other problems become more solvable.”
Sandra J. Pennecke, 757-652-5836, sandra.pennecke@pilotonline.com