The Government Shutdown Will Be Devastating for the D.C. Region

Previous shutdowns have had a significant impact on the regional economy. During the 2013 government shutdown, which lasted just over two weeks, the D.C. area saw a five percentage point reduction in personal consumer expenditures, according to a 2023 report by Fiserv. The 35-day government shutdown that spanned the end of 2018 through the first few weeks of 2019 had a dramatic impact on the regional economy. According to city officials, it cost D.C. more than $47 million worth of revenue. Another estimate found that the region lost $1.6 billion in economic activities and earnings during the first 25 days of January 2019, although some of that was recouped when federal employees were repaid.

But the current economic situation could exacerbate the effect of a shutdown. Moody’s Analytics estimates that the district itself will experience a decline in GDP from the second quarter of 2025 through the third quarter of 2026, with federal layoffs leading to a total loss of 35,000 jobs through the third quarter of 2027. In the larger D.C. area, Begley said that projected GDP decline will result in a recession for the second half of 2025. The private sector in D.C. and in the metro area is expected to be largely stagnant.

The Brookings report found that regional private-sector growth has plateaued in recent months, and may be unable to absorb additional federal job losses. Moreover, the industries that have seen the greatest growth, such as construction and hospitality, are not necessarily aligned with the skills and experiences of the federal workers who stand to lose their jobs. These struggles could result in former federal workers—a generally highly educated and high-earning population—leaving the DMV altogether, which in turn would lead to further economic losses in the region.