2025: The year of living disruptively

Looking back on 2025, the best symbol of the past year’s upheaval might be the White House, if not its most famous occupant.

Since moving back into 1600 Pennsylvania Ave. in January, our real estate mogul president has launched into a series of home renovations worthy of its own HGTV series. The most prominent changes include gilding the Oval Office in gold accents reminiscent of Versailles, paving over the Rose Garden lawn, and tearing down the 123-year-old East Wing to make way for a gargantuan $300 million ballroom.

Similarly, in his second term, President Donald Trump has taken a wrecking ball approach to the federal government.

By the end of the year, the administration expects to shed some 300,000 federal jobs, the most since the end of World War II, according to The New York Times.

While there was undoubtedly some fat that could have been shed from among the federal government workforce, which numbered 2.4 million before Trump took office, critics have blasted the haphazard nature and severity of the workforce cuts, as well as the administration’s clawback of previously allocated government funding.

These actions have had a particularly disproportionate impact on Virginia, home to four of the world’s five largest defense contractors, nearly 150,000 federal workers and 150,000 federal contracting employees.

More than 30,000 Virginia federal workers could be out of work by the end of this year. And we’re also seeing downsizing in government contracting, with McLean-based Booz Allen Hamilton, for example, laying off about 10% of its workforce so far this year in response to federal cuts.

Partly because of this, economists at the University of Virginia’s Weldon Cooper Center for Public Service are forecasting an economic slowdown here, “with Virginia experiencing its most modest economic growth since 2021” and statewide unemployment reaching 4.8% in 2026, the highest since 2021 and the pandemic.

The Trump administration‘s federal cuts and volatile tariffs were primary reasons cited by CNBC this year in dropping Virginia from No. 1 to No. 4 on its annual Top States for Business rankings.

These were also likely contributing factors in November’s elections, with Virginians selecting a Democratic slate led by Gov.-elect Abigail Spanberger, who will be Virginia’s first woman governor and will lead a Democratic-majority state legislature.

But those are far from the only forces powering change going into 2026.

Wealth imbalance continues to grow while consumer inflation lingers, and housing prices and mortgage rates remain elevated, prompting Trump to propose 50-year home mortgages.

The stock market, which began the year with the S&P 500 near record highs, has remained resilient, recovering from an April global stock market crash in response to Trump’s aggressive tariffs policy.

Some of that recovery, though, is thanks no doubt to artificial intelligence, with tech companies this year announcing $375 billion in planned AI infrastructure investments. The AI boom has raised tech company market values by nearly $19 trillion since 2022, according to some estimates, which is also leading to fears of a coming AI bubble, not to mention predictions of widespread white collar job losses.

Here in Virginia, in our new AI era, there seems to be no end to data center development, which is generating lots of local tax dollars and construction jobs. However, the electricity-hungry centers are also causing a fast-evolving power crisis, straining the grid’s ability to keep up and move to renewable energy sources.

While we’re balancing those challenges and opportunities, Virginia is also blessed to be nurturing a fast-growing pharma and biotech industry, with pharmaceutical giants AstraZeneca, Eli Lilly & Co., and Merck & Co. this year announcing nearly $13 billion in total investments to build new manufacturing operations here.

As we enter another new year, we’d be wise to remember that old saw: The only constant in life is change.

On behalf of Virginia Business, I wish all of you a happy holiday season and much success in 2026.