D.C.'s DOGE recession is fast approaching
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Illustration: Sarah Grillo/Axios
Signs of a DOGE recession are flashing in D.C. — rising unemployment, less credit card spending and jitters about more federal cuts.
Why it matters: A local "mild recession" is expected as the Trump administration downsizes the capital city's big factory — the federal government, employer to 17% of the region's workforce.
State of play: Even before most of the federal job cuts, the number of unemployed residents in D.C. increased 12.2% in February over last year, city stats show.
- "Negative" is the city's credit outlook, Moody's Ratings declared last month. The agency yanked D.C.'s perfect triple-A bond rating, making it potentially pricier to finance projects.
- Spending at big retailers in the region dropped 2% in April, the Washington Post reported after crunching credit card data from Earnest Analytics. Everyday locals are skipping pricey gym memberships and dining out less, business owners tell the Post.
- D.C. home listings are soaring.
Zoom out: There's pain in the suburbs, including in Maryland's Prince George's County, which has a prosperous Black middle class. The unemployment rate rose to 3.5% this year, from 2.2% in March 2023.
- Trump canceled plans to build a new FBI headquarters there — and the Washington Commanders and Six Flags America are leaving, the Post noted.
- In tech and defense-rich Fairfax County, Virginia, the jobless rate rose to 3.2% in March, from 2.2% last December.
Then: The federal government insulated D.C. from the worst of the Great Recession, then powered an economic boom. D.C.'s population grew about 14.6% between 2010 to 2020, according to the Census Bureau. Cranes dotted the skyline.
- Now: D.C.'s economy is projected to contract by 1.9% next fiscal year, the D.C. Chief Financial Officer says. Construction has slowed, with residential building permits dropping 33% as of February.
The vibes are bad — 79% of area residents think the Trump administration's cuts to federal programs and jobs will hurt the local economy, according to a new poll by the Post and George Mason University's Schar School of Policy and Government.
What we're watching: Mayor Muriel Bowser's 2026 budget plan is the next economic indicator. Deep cuts to services are expected, at a time when the city wants to invest in a pricey redevelopment anchored by a new NFL stadium.