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By Joy Vann

In April, the presidential administration hit nations across the globe—friend and foe alike—with the toughest tariffs since the Smoot-Hawley Tariff Act of 1930.

Nearly a century later, the United States faces economic uncertainty as the world waits to see if the current set of tariffs is on or off and how consumer sentiment is faring as other factors come into play.

At ��������’s annual Midyear Economic Forecast breakfast held on June 6 at the Holiday Inn in Newport News, economists from the Dragas Center for Economic Analysis and Policy offered their thoughts on consumer confidence, the federal workforce, the housing market and other topics shaping the economy.

More than 280 business leaders, policy makers and academics from across Hampton Roads turned out to learn about the research of Bob McNab, Ph.D., director of The Dragas Center, and assistant director Vinod Agarwal, Ph.D., at the event which is presented by the Virginia Peninsula Chamber of Commerce and held in partnership with ��������’s Strome College of Business.   

Dr. McNab’s presentation emphasized the challenges of economic forecasting in times of volatile tariff policy.

“There have been over 50 changes to tariff policy, not minor but large-scale structural changes in tariff policy, since January. That's an average of two a week,” he said. “In that climate, it is almost impossible to figure out where the economy is going, because one day tariffs might be 135%, the next day they might be 30% and if you’re a small business owner, your costs escalate or decline significantly weekly, and it becomes almost impossible to plan.”

He said, in addition to the on-and-off-again tariff policy, another factor is the surge in imports in the first quarter of 2025. In the first quarter of the year, there was more than a 40% increase in imports nationally relative to the first quarter of 2024 as businesses planned for expected tariffs. In the second quarter, businesses will draw down inventories. While the outcome is difficult to predict, as inventories decline, prices will likely increase.

He joked that, unlike during the pandemic when toilet paper flew off store shelves, people would not need to take out a second mortgage to buy it because it is produced domestically and thus not affected by tariffs.

Consumer and business sentiment also declined in the first five months of 2025. Consumers now expect inflation in 2026 will approach 7%, mainly due to the impact of tariffs on the cost of goods and services. Dr. Agarwal said that Hampton Roads would fair slightly better than the rest of the state and the nation because defense spending—a pillar of the area’s economy—will provide a cushion.

Dr. Agarwal said the housing market remains similar to what it was in January—while inventory has increased, housing prices continue to increase. The median price for the average home is $336,0000 which is 20% higher than in 2021.

Dr. Agarwal noted that many people in Hampton Roads spent more than 30% of their income on housing.

“While absolute housing costs in Hampton Roads may be lower than Northern Virginia and Jacksonville, etc., we need to look at the housing cost burden. That is, how much do you spend on housing as a proportion of your income. When we look at it that way, on average, people in Hampton Roads who hold a mortgage spend more of their income on housing than Northern Virginia.”

He discussed the need for a regional housing strategy to help to stabilize housing prices and rents and to increase economic growth by attracting more businesses.

“If you want this economy to grow, if you want to attract more firms to come to this area, we need to find housing which is affordable enough for these families to move,” he said.