Virginia Falls Off CNBC's Top 10 for Business List

Federal spending cuts to blame but that may be changing.

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Continuing a downward trend, Virginia has been demoted as one of the best states for doing business, according to a CNBC poll.

Virginia has been on the swing south since about 2011, when it was ranked tops by the cable news service. It also was No. 1 in 2007 and 2009.

But CNBC took if off the top 10, placing it at No. 12 for last year.

The reason is obvious: Virginia has been creating fewer jobs because its cash cow -- the federal government -- has been drying up of milk after the wind-down of the wars in South Asia and federal sequestration of spending.

Many politicians and economists realize that the Old Dominion needs to diversify its economy away from military and other federal jobs. But that’s hard to do given the state’s location near Washington and that it has an enormously valuable harbor and infrastructure facilities in Hampton Roads.

Another problem is that much of the job growth, at least in Richmond, has been in health services and finance. The former needs other sources of income to sustain. Financial services -- meaning Capital One Financial -- are based on credit, which the 2008 recession shows, can tank quickly.

But a turnaround may be evident. Over at Bacon's Rebellion, where I also blog, there's a report that the federal spending woes may be ending. Federal jobs creation may be stabilizing and perhaps start growing again.

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