In Brief:

The Washington, D.C., region is bracing for the impact of cuts to federal spending and the workforce.

Consumer spending trends, home listings, and unemployment figures all indicate a potential economic downturn.

Washington, D.C., Mayor Muriel Bowser is hoping investing in growth can help mitigate more painful budget cuts.

What’s the best way to face down a recession? For Washington, D.C., Mayor Muriel Bowser, the answer is investing in growth.Bowser delivered her annual budget proposal on Tuesday amid a period of uncommon economic uncertainty for the Washington, D.C., area. In the first few months of the second Trump administration, the federal government has cut thousands of jobs, with disproportionate impacts on Washington and surrounding counties. Congress is currently negotiating a budget that could cut federal spending, after passing a continuing resolution that will force major cuts to the district budget in the short term. Changing signals about tariff policy have also led some businesses to hold off on making big decisions about the future, area leaders say. For Washington, the economic outlook is suddenly much gloomier after several decades of sustained growth.“Our challenge as a city is to turn the potential loss of 40,000 federal jobs, associated local jobs, and one billion dollars of revenue over four years, into a gain of new jobs and new revenues,” Bowser said in a budget letter outlining her “growth agenda” to the D.C. Council. “To do that, we must focus investments — in both capital and operating budgets — on opportunities that lead to more economic activity.”Like so much else that’s happened in the last few months, the real impacts of federal policy decisions seem to lurk always just beyond the horizon. But for the Washington metro area, the telltale signs of a downturn are starting to emerge. Area economists and business leaders are watching a hodgepodge of direct and indirect indicators to get a handle on the direction of the economy, and many of them are flashing gentle warning signs.Unemployment rates in the district and surrounding counties have inched up slightly but gradually for most of the year. There are lots of people behind the numbers: Arlington County, Va., for instance, saw a 60 percent increase in the number of unemployed residents in March compared to the prior year. Unemployment claims from federal employees are slowly increasing . Office occupancy is up with federal return-to-work policies, but consumers are spending less on their credit cards and at district restaurants than they were in recent months. Local banks are anticipating a recession. There was a “dramatic” increase in homes listed for sale in some parts of the region in April, according to the Northern Virginia Association of Realtors. And new housing permits in the district have recently declined “Investors are very leery about D.C. right now,” says Yesim Sayin, executive director of the D.C. Policy Center . “They have a million places they can send their money, and D.C., which was at the top of their list for the longest time, is no longer at the top.”Sentiment among business leaders in Northern Virginia has shifted as well. A survey of CEOs released in April showed most — about 59 percent — expected the economy to decline in the next six months. That’s a reversal from the end of last year, when a similar portion of area leaders expected the economy to grow. Still, it will take time for the range of impacts to become clear, as apartment leases gradually expire, students leave town and decide whether or not to return, and federal employees who took buyouts start to show up on the unemployment rolls.“It’s like walking in a haze right now,” Sayin says. “I think the effects will be spread into the future.”Not every part of the Washington metro area will feel the effects of the shift in the same way. Parts of Northern Virginia with high concentrations of federal contractors could suffer especially acutely depending on how federal spending changes. Montgomery County, Md., could be hit particularly hard by cuts affecting the National Institutes of Health. The state of Maryland recently saw its credit rating downgraded by Moody’s amid tight fiscal projections and a worsening economy. (Other rating agencies have reaffirmed the state’s creditworthiness, though: “To hell with Moody’s,” state Treasurer Dereck Davis said recently .) Loudoun County, Va., is in good shape in terms of public finances partly due to the recent explosion of data center developments . But regional business leaders are operating in a “fog,” says Tony Howard, president and CEO of the Loudoun County Chamber of Commerce.“Folks are starting to use the R word,” Howard says.These conditions make an interesting environment for Bowser to go all in on economic growth. Sayin, of the D.C. Policy Center, says her “growth agenda” budget makes a bet that cutting back regulations and promoting business growth will save the district from some of the most painful cuts in future budget years. It’s a decent bet, Sayin says, but the budget proposal also acknowledges that it may not work, and that cuts may occur one way or the other. The budget proposal has landed amid a local debate about how much public money should be used to support private economic ventures like the proposed redevelopment of RFK Stadium for a future home for the Washington Commanders, a plan backed by Bowser. Some other local leaders are already decrying some of the cuts proposed in the budget. It’s “a budget that’s going to be very hard on folks with the least,” one district councilmember told the Washington Post What happens in Washington has an outsize impact on the region, not only as the center of employment but also as a cultural and tourism center and a partner in funding shared regional amenities, like the Metrorail system. For a long time, federal spending and the federal workforce have been primary drivers of the region’s growth. Many regional business leaders are now thinking about how to shore up the economy for an era of government contraction.“An employer in Northern Virginia or Bethesda [Md.] or Rockville [Md.] attracts and retains its employees as a function of the District of Columbia being an exciting, vibrant, capital city,” says Julie Coons, the president and CEO of the Northern Virginia Chamber of Commerce. “We believe we need to seek and create a new economy. We are in the process right now of trying to better define that.”

Leaders across the D.C. area are spreading awareness about the ripple effect that could develop if fired federal workers and their families move away.

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Fairfax County Sheriff Stacey Kincaid called Board of Supervisors Chairman Jeff McKay to share the news that the public health nurse at the county’s Adult Detention Center was leaving the job.

Kincaid described it as a valuable and hard-to-fill position, McKay said. It’s only vacant now because the husband of the person who held that job was fired from the U.S. Agency for International Development, as part of the sweeping changes handed down to the federal workforce by President Donald Trump’s administration.

Instead of considering alternatives jobs, the couple decided to retire and move to North Carolina, where it’s cheaper to live, McKay said.

For weeks, leaders across the D.C. region have been speaking out about the consequences of government cuts led by the “Department of Government Efficiency,” a Trump administration commission tasked with slashing federal spending.

But now, they’re also spreading awareness about a lesser-considered impact — how many more open jobs there could be if fired federal workers move away and bring their families with them.

“This is a ripple effect that is immeasurable,” McKay said of the public health nurse leaving.

At a Board of Supervisors Economic Initiatives Committee meeting on Tuesday, McKay said when federal workers lose their jobs, there isn’t an easy alternative for them to pursue.

“Many of these people are highly sophisticated, highly educated, highly specialized and highly paid,” McKay said. “And when the principal breadwinner of a home loses their job, it’s a whole lot harder to prevent them from leaving.”

And if that happens, McKay said “secondary wage earners” would likely follow. Those include roles such as teachers, bus drivers, janitors and first responders.

“They’re typically not the main income drivers of a household,” he said. “And if the main person loses their income, you’re going to lose people in Virginia, not just in Northern Virginia, but you’re going to lose people in Virginia.“

That topic came up during a separate meeting Tuesday morning. A General Assembly emergency committee studying the impact from changes to the federal workforce convened in Alexandria to consider consequences of the cuts and how to respond.

Northern Virginia leaders asked state lawmakers for funding for child care subsidies, housing assistance, moratoriums on utility cut offs and help for community organizations, to support government workers who lost their jobs, McKay said.

“I shared with them that we got a lot of help during COVID, but it was from the federal government,” McKay said. “That’s not going to happen this time. Our ability to recover had to do with a lot of infusion of money and support.”

Meanwhile, in Fairfax County, supervisors were briefed on the economic impact of the workforce changes. A new analysis explored impacts of workforce and contractor cuts at 10%, 20% and 30%, according to Stephen Tarditi, director of market intelligence at Fairfax County’s Economic Development Authority.

If 20% of government workers and contractors lost jobs, that would include over 82,000 potential workers in Fairfax County, Tarditi said. The county would lose almost $220 million in tax revenue in that scenario, according to county documents.

There are also impacts, Tarditi said, to how residents spend money or visit doctors.

“These numbers are very somber and sobering,” Supervisor Rodney Lusk said. “It’s pretty significant when you look at the job loss numbers.”

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ALEXANDRIA, Va. (AP) — Northern Virginia leaders urged lawmakers on Tuesday to enact emergency legislation to help stabilize their local economy as the White House cuts federal jobs, which they said has sharply impacted the dense cluster of government employees and contractors based in the suburbs of the nation’s capital.

In presentations to a House of Delegates bipartisan committee addressing federal reductions, local authorities described the job reductions as a once-in-a-lifetime overhaul of Fairfax County’s economy that would push high-salary workers to leave the state.

Fairfax County Board Chairman Jeff McKay said the shift would impact staffing at other ventures, ranging from child care services to staffing at the local county jail.

“What we’re facing here is far worse than COVID,” said McKay, a board member of the state’s most populous county. “COVID was an international pandemic that was affecting everyone. This is something that’s acutely affecting Virginia and northern Virginia.”

McKay added: “We got through COVID because we had a lot of federal support. We will get no federal support with this. In fact, it is federal actions that are causing these actions.”

As of Tuesday, roughly 1,300 federal employees and contractors have filed unemployment insurance claims with the Virginia Employment Commission since the end of January, Secretary of Labor George’ Bryan’ Slater, who attended the committee meeting, said to a reporter during the meeting.

The meeting comes as all 100 House of Delegates seats will be on the ballot in November, along with the governor. Three of the four lawmakers in Democrats’ most competitive districts, according to a recent announcement by the Democratic Legislative Campaign Committee, serve on the bipartisan committee.

According to a presentation by the Northern Virginia Regional Commission, federal jobs account for roughly 6% of the workforce in northern Virginia and about 5% of jobs for the entire state. By comparison, such government positions only account for 2% of U.S. jobs, according to the regional commission.

Republican Del. Rob Bloxom said the House of Delegates committee would need more clarity on how the workforce reductions would impact state revenues. He added that the committee should engage more with the Virginia Employment Commission, an agency overseen by Slater.

“Like the administration or hate them, we are all in this together,” Bloxom said. “We really need them in the room to verify what they’re seeing.”

Republican Gov. Glenn Youngkin has created an online jobs portal for people looking for employment in the state, including a specific page for federal workers.

In late March, Youngkin said: “Let me be really clear: anybody who writes that there are only fast food jobs is not doing your job. Go to the website, pretend you’re someone in Fredericksburg, Virginia, who might lose their job and go find all of the jobs that would match that person’s career.”

On Tuesday, Alissa Tafti, a former union leader for her agency’s union, said she worried that former federal workers would still have difficulty finding employment in Virginia that would match their salaries, even if there are available positions out there.

“Federal workers who are getting their jobs cut, many of them … are people with really specific skill sets — highly skilled individuals, but with really particular skill sets,” said Tafti, an economist who worked for the federal government until the end of March. “It makes it really hard to find another job in another field. The economy is going to have a really hard time absorbing this many people.”

Lawmakers on the bipartisan committee are speaking to authorities in different regions of Virginia to assess how cuts to federal jobs and spending are impacting parts of the state. The committee’s next meeting will be in southwestern Virginia, lawmakers said. ___

Olivia Diaz is a corps member for The Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.

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