By: David Griffin, Marketing & Communications, Mount Vernon Springfield Chamber of Commerce
At the Chamber’s Year-End Economic Update, Dr. Terry L. Clower, Chair of Public Policy at George Mason University’s Center for Regional Analysis, provided an in-depth look at the Washington region’s economic performance and what local employers should expect heading into 2026. His presentation highlighted a mix of strengths and emerging challenges shaping the future of our regional economy.
Slowing Job Growth and Shifting Labor Patterns
According to the job change charts from Dr. Clower, the Washington metropolitan area experienced a net loss of approximately 9,000 jobs between August 2024 and August 2025. The professional and business services sector saw the sharpest decline, losing 18,800 jobs, while the federal government shed 21,500 jobs over the year. These declines significantly contrasted with gains in education and health services, which added 11,500 jobs, and smaller increases in areas such as leisure, hospitality, and construction.
Unemployment remained relatively stable regionally, with Northern Virginia posting a 3.7% unemployment rate, which is one of the lowest in the metro area and still below the national average.
Population Trends Reflect Post-Pandemic Migration Patterns
Population data showed continued natural growth and positive international migration, but the region is still managing domestic out-migration, a pattern that intensified during the pandemic. While the situation has improved in recent years, Dr. Clower noted this trend affects everything from workforce availability to long-term regional planning.
Housing Market: Inventory Up, Prices Still Rising
The presentation revealed a housing market undergoing a reset:
- Existing home inventory rose 19.5% year-over-year, reaching just over 21,000 active and pending units in October 2025.
- Existing home sales remain below their long-term historical average due in part to higher mortgage rates and affordability pressures.
- Despite rising inventory, the median home sales price climbed to $585,000.
As Dr. Clower stated,
“The actual pricing of a home in this area can go down, even though the effective cost rose dramatically… looking [at] August of ’23 and August of ’24, a home in Arlington, that same home that you bought in ’23 and ’24, between the rise in the value and the difference in mortgage rates, your monthly payments doubled. If we don’t fix this, we are not keeping the young workers.”
Building permits also slowed compared to peak years, with 2,210 permits issued in August and a 3-month moving average of 1,847. This is an indicator of more cautious residential development.
Economic Strengths Position the Region Well
Dr. Clower highlighted several “assets” that give the region an advantage in the long term:
- A highly educated workforce
- Federal Government
- Growth in data centers and digital infrastructure
- Expanding industries such as artificial intelligence (AI), quantum technologies, and commercial space
- High quality-of-life amenities
These strengths help buffer the region from economic volatility and can make it attractive to employers in future-oriented sectors.
Challenges That Could Shape 2026 and Beyond
The region must also confront several serious challenges:
- Retaining skilled workers amid rising housing costs
- The possibility of further reductions in federal employment
- Transportation constraints
- Uneven economic growth within the region
- Local decision-making hurdles that slow development and business expansion
Dr. Clower emphasized that addressing these issues requires coordination across DC, Maryland, and Virginia as well as continued support for business-led economic development.
Looking Forward
Despite recent job losses and housing market pressures, Northern Virginia and the broader Washington region remain economically resilient, with strong fundamentals supporting future growth. Dr. Clower’s message underscored the importance of staying informed, adaptable, and engaged as regional conditions evolve.
To learn more about Dr. Clower’s work, visit the GMU Center for Regional Analysis at cra.gmu.edu.
You can view Dr. Clower’s full presentation in PDF format here.