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Federal Cuts Send DMV Economy Into Tailspin, Brookings Report Warns

September 24, 2025

The Trump administration's downsizing of the federal government is having a disproportionate impact on the DMV region (Washington DC, Maryland, and Virginia), according to Brookings research. Since January 2025, the region has lost federal jobs at nearly twice the national rate, with unemployment rising three times faster than the national average, particularly in suburban Virginia counties. The economic impacts are widespread, including a 64% increase in homes for sale compared to last year, a dramatic slowdown in venture capital investment, and rising household financial distress despite some positive indicators in tourism and declining crime rates.

Who is affected

  • Federal workers in the DMV region, with 17,000 jobs lost in six months
  • Residents of suburban Virginia counties (Arlington, Alexandria, Fairfax, and Loudoun) experiencing the steepest unemployment increases
  • Young people facing a sharp decline in internship opportunities
  • Households experiencing worsening food insecurity and financial distress
  • The DMV regional economy as a whole
  • Homeowners in the region facing a housing market with 64% more homes for sale

What action is being taken

  • Brookings researchers are monitoring and analyzing economic indicators in the DMV region
  • The Capital Area Food Bank is tracking food insecurity through their 2025 Hunger Report
  • The private sector is adding some jobs, primarily in construction, hospitality, and health care
  • The Federal Reserve is tracking financial distress indicators like credit scores

Why it matters

  • The federal retrenchment has left the capital region weaker than the nation in nearly every major category of economic health
  • The economic disruption affects not just DMV residents but could have downstream effects on federal government capabilities
  • Weakening the specialized talent pool and related service sectors in the DMV could undermine the federal government's capacity
  • The economic impacts extend beyond federal employment to affect housing markets, innovation, and household financial stability
  • The DMV region serves as the global headquarters of the U.S. government, making its economic health nationally significant

What's next

  • No explicit next steps stated in the article

Read full article from source: The Washington Informer

Federal Cuts Send DMV Economy Into Tailspin, Brookings Report Warns