Despite continued concerns about inflation, federal worker layoffs and other issues, business leaders in Northern Virginia are feeling more upbeat about their own economic prospects and those of the region than they were this spring, a new survey found.
The Northern Virginia Chamber of Commerce (NVC) worked with the marketing firm Pinkston to survey 135 corporate executives and business owners about their experiences with the Trump administration’s efforts to downsize the federal government, their expectations for the near-future and their policy priorities.
Released today (Thursday), the results of the third-quarter 2025 Business Leader Survey found that 68% of participants have a somewhat or very optimistic outlook on their company’s future for the next six months — an increase from 54% in a similar Q2 2025 survey published in April.
Business leaders again reported more cynicism when looking at the national economy, but the 45% who said they’re somewhat or very pessimistic still represent a drop of 20 percentage points from the Q2 survey.
There was a similar shift in sentiment on the regional economy.
In April, more than half (59%) of the nearly 300 respondents anticipated that Northern Virginia’s economy would slowly or significantly decline over the next six months. Now, a third (33%) of respondents believe the economy will slowly grow, outpacing the 30% who think it’ll slowly decline. The share expecting a significant decline dropped from 21% to 4%.
The more optimistic outlook seems somewhat at odds with emerging signs of a potential economic slowdown. Fairfax County’s housing market has been relatively sluggish for the first half of the year, with high prices holding back buyers and real estate agents reporting a significant percentage of clients looking to buy or sell in the D.C. area due to federal layoffs or retirement.
In addition, the county’s unemployment rate ticked up in May to its highest level since August 2021, alarming at least some local Democratic leaders, and nationally, consumer spending dipped in May, suggesting people are becoming more careful about discretionary purchases.
Business leaders ‘very concerned’ by federal cuts
The Trump administration’s ongoing gutting of the federal government remains a concern for most Northern Virginia business leaders, according to the NVC and Pinkston survey.
Nearly half (47%) of respondents said they’re “very concerned” about the so-called Department of Government Efficiency’s (DOGE) elimination of jobs at federal agencies and the broader implications for the regional economy. Another 33% said they’re somewhat or “a little” concerned.
Though 56% of survey participants said the mass layoffs of federal workers haven’t had any impact on their business decisions in the last six months, almost a quarter (23%) reported downsizing their operations, 16% said they’d shifted to new services or products, and 7% have laid off staff.
Some companies (6%) said they’ve started working more with local and state governments, while only 3% said they’ve expanded operational capacity or increased collaboration with the federal government.
Most business leaders anticipate hiring more workers (30%) or keeping their staffing about the same (54%), but 10% of respondents expect to “reduce headcount” by the end of this year, a decrease compared to the 18% who had those expectations in the spring.
The risk of disproportionate impacts from federal job cuts were cited as a major factor in CNBC’s decision to drop Virginia in its annual ranking of the “Top State for Business.” The Commonwealth slipped to fourth place this year after coming in at no. 1 last year and in at least top three every year since 2018.
According to the survey, the downsizing of the federal government was one of the top “external issues” that business leaders expect to affect their company’s growth in the next six months, tied with inflation and followed by tariffs.
While 48% expect no impacts, two-fifths of respondents (40%) said President Donald Trump’s plan to impose tariffs on imported goods from electronic chips to food and toys are inducing a slow or significant decline in their business, while just 11% reported seeing growth.
Pinkston Senior Vice President D.J. Jordan suggested the increased optimism in the survey may stem from billionaire Elon Musk’s departure from the Trump administration in late May and actions by DOGE “subsiding,” though more federal worker firings are expected after the U.S. Supreme Court allowed reduction plans to proceed.
“This region’s business leaders are incredibly smart and resilient, and they can adapt and make effective changes to their business if they have more certainty,” Jordan said in a press release. “Tariff policy and DOGE have created uncertainty about the future playing field, and it appears that some companies are waiting on the sidelines before growing operations and increasing capital.”
The survey also questioned participants about their priorities for state and local legislators, with the governor’s mansion and General Assembly up for grabs in the upcoming Nov. 4 general election.
Affordable housing and tax reductions, in that order, topped the lists for both state and Fairfax County policy priorities. The respondents also want to see investments in infrastructure investments, with 44% saying road repairs would the most beneficial transportation-related improvement for their businesses.
Conducted between July 7-14, the survey was supported by 10 different chambers of commerce across the region, including NVC, the Northern Virginia Hispanic chamber, and ones representing Reston, Central Fairfax, Dulles, Falls Church and more.
According to NVC, most of the participants lead companies in the government contracting, aerospace and defense, professional and financial services, technology, retail, and real estate sectors.
NVC released the survey results in advance of a planned unveiling on Monday (July 21) of a new “NOVA Roadmap” that will make recommendations for diversifying and strengthening the region’s economy.
“Our Q3 survey makes one thing clear: the federal government’s impact on our regional economy is real and significant,” NVC President and CEO Julie Coons said. “That’s why NVC is forging a path forward with our NOVA Roadmap initiative — working closely with regional partners to ensure the health and longevity of our economy. Despite concerns at the federal level, business leaders are feeling more optimistic about their companies’ ability to navigate uncertainties, highlighting the resilience of our region.”
