D.C. region faces its most devastating government shutdown yet

• But this one would come as the area is already struggling after previous federal cuts.

Driving the news: The government will shut down Oct. 1 if Congress doesn't pass a spending package.

• OMB has told agencies to create plans for mass firings of government workers should the shutdown happen. These would go beyond the standard temporary furloughs seen during a shutdown, and would target workers in programs with impacted funding.
• National defense, immigration enforcement and border security jobs would be safe, and programs that received money via the One Big Beautiful Bill likely wouldn't be targeted.

Zoom in: This shutdown has the potential to be the most harmful Washington has ever seen, says Brookings fellow Tracy Loh, co-author of a recent report about the dire impacts the Trump administration's cuts have had on the DMV.

• "It could represent an unprecedented crisis."

A big driver of recent regional downturns has been uncertainty about what's next — which will only be exacerbated by a shutdown and more firings, Loh tells Axios.

• The region has already seen the highest increases in unemployment in areas where typically it's lowest — think traditionally white-collar, prosperous areas like NoVa or Montgomery County, says Loh.
• And so the trickle-down effects of a shutdown could be more severe this time around.

State of play: While the local housing market has remained resilient overall, if Trump does fire more feds, "it could have a significant impact" on the real estate market, says Bright MLS chief economist Lisa Sturtevant.

• "We would see more listings, slower demand and slow price growth or even price declines."

Also possible: Brain drain. "This region is a really extraordinary concentration of talent," says Loh. "We will lose out nationally on innovation if this talent pool slips away [because opportunities dry up]."

• And expect a tight white-collar job market to only get tighter.

Business confidence in the area is already down, as is venture capital interest — and this would likely continue to decrease, says Loh.

• This will also make it harder to diversify the area's economy, something local leaders have called for as a safeguard against further federal cuts.

And it's possible the already-impacted tourism and hospitality sectors would take another hit as museums close and business travel dries up, Loh tells Axios.

The intrigue: House Minority Leader Hakeem Jeffries (D-N.Y.) is using the moment to try to galvanize Virginians ahead of their upcoming gubernatorial election.

• "[Trump and MAGA's] goal is to ruin your life and punish hardworking families already struggling with Trump Tariffs and inflation," Jeffries wrote on X. "Remember in November."

What they're saying: Senate Minority Leader Chuck Schumer (D-N.Y.) called the move to fire more feds "an attempt at intimidation," saying, "These unnecessary firings will either be overturned in court or the administration will end up hiring the workers back."

What we're watching: How local leaders and officials respond to a shutdown, as well as its aftermath.

• If workers are ultimately rehired — as has happened with other Trump firings — that could soften the blow, says Loh.

The bottom line: "This region's fundamentals are excellent and very strong," says Loh. "But it's time to protect and leverage them."