Federal job losses accelerate as Alexandria braces for budget season
City Manager reports federal employment down 9 percent nationally since January; local housing market shows continued signs of cooling
Federal workforce reductions that began straining Alexandria last year have accelerated sharply, City Manager James Parajon reported Tuesday night, with national federal employment down 277,000 positions—or 9 percent—since January.
“There is continued uncertainty, primarily related to some of the federal administration policies and practices,” Parajon told the City Council during his monthly State of the Economy report. “That uncertainty is manifested itself particularly in the money markets, the capital markets that really fuel much of our economy.”
The update comes as the city prepares to enter budget season, with Parajon’s proposed FY 2027 budget presentation scheduled for Feb. 24.
National indicators remain sluggish
The national unemployment rate edged down slightly to 4.4 percent in December from a revised 4.5 percent in November, though the figure still marks the highest level since October 2021. Inflation decreased to 2.7 percent in November, down from around 3 percent in September, but remains above the Federal Reserve’s 2 percent target.
Job growth has slowed considerably. The economy added just 50,000 jobs in December, down from 56,000 in November.
“That 50,000 historically over a period of years is one of the lowest numbers you’re going to see,” Parajon said.
Employment trends varied by sector, with continued growth in food service, health care and social assistance, while retail trade and federal government positions declined in December.
Housing market continues to cool
Local real estate indicators show a market in transition. Sales in November fell approximately 11 percent from the prior year, dropping to 121 from 136. Active listings, while down from last month, remain elevated at 293 compared to 196 in November 2024—a 49.5 percent jump that gives buyers more options but signals reduced demand.
Average 30-year fixed mortgage rates hover around 6.25 percent. The average number of days properties remain on the market has increased to 32, continuing an upward trend that began in early summer. Last year at this time, homes averaged 24 days on market.
“This has been edging up really since probably the early summer,” Parajon noted. “That’s still very strong. This is a very strong residential market, but there are signs that it is weakening.”
The average sale price as a percentage of list price has also dropped to 97.6 percent, down from 98.4 percent a year ago. However, 46 percent of homes still sold within 10 days.
Budget implications
The softening housing market carries significant implications for city finances. More than 60 percent of operational revenue comes from property taxes, with roughly 80 percent of that from residential properties.
Parajon emphasized that economic uncertainty is translating directly into household stress.
“People particularly are concerned about their financial well-being and their job prospects or job security,” he said. “That to me is one of the key elements because that’s where locally we’ll see less spending on disposable income and things like that if people are frankly worried about their stability and dipping into their savings for increases related to groceries and things like that that we’ve all experienced.”
Also Tuesday night, the council held public hearings on collective bargaining agreements with police, fire and municipal employee unions. In December, the council sided with the police union on wages in a 7-0 vote, approving approximately $10.2 million in salary increases over three years—about $2.2 million more than city management had recommended.
Parajon’s proposed budget presentation on Feb. 24 will be followed by a series of work sessions and public hearings through the spring. The FY 2027 budget is set for final adoption on April 29.
Residents affected by federal workforce changes who need assistance with their tax obligations can contact the city at FedImpact-AlexTax@alexandriava.gov.