Old Dominion University’s 27th annual “State of the Region: Hampton Roads” report examines the performance of the regional economy this decade, asks how changes to federal trade, immigration and spending policy have impacted economic growth, and discusses what 2027 may hold for Hampton Roads.
Consumers continue to express their displeasure about economic conditions in Hampton Roads and across the United States. According to the Social Science Research Center at Old Dominion University, 42.8% of residents rated economic conditions as “excellent or good” in 2026, an 8.5 percentage point decline from 2025. Nationally, consumer sentiment was lower in September than at any point during the Great Recession of 2007-2009. A recent Gallup survey found that 72% of respondents believed that the national economic outlook was getting worse, not better.
Inflation, while lower than its peak in 2022, remains persistent and is likely to rise in the coming months as energy price pressures flow through supply chains. Evidence from the New York Federal Reserve illustrates that inflation is a regressive tax, that is, lower-income households face a higher inflation rate than higher-income households.
Labor markets have continued to slow. Those working or looking for work in Hampton Roads declined in 2025 and 2026. More than 4,100 residents claim continued unemployment benefits in September, approximately 12% higher than January. The number of jobs across the region also declined, with approximately 10,000 fewer jobs in August when compared to the peak in 2025.
Higher tariffs remain a self-inflicted wound. From January 2025 to July 2025, the dollar value of exports and imports through the Port of Virginia declined by 17% and 10.3%, respectively relative to 2024. The good news is that the Port of Virginia has seen a recovery in traffic. Year-to-date exports and imports were 6.9% and 3% higher, respectively through July 2026. The port has outperformed other major ports this year, a bright spot in an uncertain landscape.
The Virginia Tourism Corporation estimated that direct visitor spending to the region approached $7.2 billion in 2025. Nominal hotel revenues were approximately $1.2 billion in 2025, but, when adjusted for inflation, real revenues were flat. The good news is that the hotel industry is rebounding with year-to-date increases in revenue (4.5%), rooms sold (2.5%), occupancy (5.2%) and revenue per available room (6.5%).
We project that defense spending in Hampton Roads will increase in 2026 and 2027, however, this news must be tempered with the rapid increase in federal debt and the costs of servicing more than $40 trillion of debt. Developments on the modern battlefield, specifically the increasing use of uncrewed weapons systems, pose a challenge to the defense industrial base in the region. While new ship construction order books may be full, variability and uncertainty in repair and maintenance funding continue to challenge the private ship repair industry.
Housing continues to limit our potential for growth. In July, the median household in the region earned $86,609, almost $20,000 less than the income needed to qualify for the median single-family residence. The region is simply not building enough single- and multi-family housing, leading to rising home prices and rents.
We project that the level of economic activity in Hampton Roads will increase for the sixth consecutive year in 2026. We estimate the pace of growth, however, has slowed from 2.1% in 2024 to 2% in 2025 to 1.6% in 2026. If current conditions continue, we forecast the regional economy will slow again in 2027.
What then can be done? We must take this opportunity to lean into advanced manufacturing, renewable energy, health sciences and research, and higher education. In the short run, we need to work together to implement a regional housing policy that reduces barriers to development.
The good news is that we are working together now more than ever. Now, as challenges mount, we must be bold in our actions and not rely on what worked in the past. The opportunity is before us, the question is can we work together to grasp it?
Robert M. McNab is director of Old Dominion University’s Dragas Center for Economic Analysis and Policy and chair of the Department of Economics. The 2026 State of the Region Report is available online at ceapodu.com.