Recent research by George Mason University’s Center for Regional Analysis (CRA) addresses the potential impact federal budget cuts, including the projected $1 trillion reduction in defense spending, could have on the economies of Virginia and our region. According to CRA Director Steven Fuller, a 10 percent reduction in federal spending could result in a $22.4 billion decline in our gross regional product (GRP) and zero growth in our regional economy in 2013.
In FY 2008, defense spending in Virginia contributed $57.4 billion to the economy, accounting for 15.6 percent of the gross state product (GSP). The total net fiscal benefit for Virginia from these Department of Defense-supported economic activities in FY 2008 was $1.1 billion. Fuller’s research shows that the projected $1 trillion in defense spending cuts could reduce Virginia’s total employment base by 122,800 jobs, with a resulting loss of $7.3 billion in wages and salaries, and our GSP could see a reduction of $10.5 billion, or 2.2 percent. The losses would be centered in two metropolitan areas: Northern Virginia and Hampton Roads, with potential losses in our region of more than 90,000 jobs, $5.5 billion in wages and $7.9 billion in GRP.
For more information, click the following links to view PowerPoint presentations about the federal government’s role in Virginia’s economic prosperity and the impact of potential federal spending cuts on Virginia's economy, or a summary report.