Terry Gerton You were instrumental in creating Brookings’ new DMV Monitor looking at the D.C. region’s economic indicators. Tell us first kind of what motivated the establishment of this model and what you’re looking at.
Amy Liu Well, the purpose of the DMV Monitor is to track the impacts of federal restructuring and federal downsizing on the D.C.-Maryland-Virginia economy, which we locally call the DMV. And we created this tool because a lot of local leaders, especially in the spring, were beginning to really worry about what was happening here, but there was not a common understanding of the scale and magnitude of the change. There were some folks who thought this was a crisis. There were others who thought this was, the region was healthy enough to absorb all these shocks, and there was also a heavy emphasis on the district. But as we know, a lot of federal workers live in the suburbs, so we really wanted a regional look. So this is really intended to provide a region-wide look at what the economic and social impacts are of federal downsizing.
]]>
Terry Gerton What are the metrics that you’re tracking inside the monitor?
Amy Liu We are looking at the economy, like jobs. We are look at the health of the worker and the workforce and the labor force. We then want to see how that then translates to other parts of the economy. Innovation, tourism, consumer spending. And then what happens to the workforce? What decisions are they making in terms of home choices, the real estate market, the commercial vacancies? Do our businesses, as they are losing contracts, also beginning to shudder, and therefore being more cautious about office leases at a time when the federal government is beginning to shed a lot of real estate and looking for buyers. So there’s a lot of downstream effects. And the last thing I want to say is we also want to look at municipal services. When people spend less and businesses collect less revenue, it has impacts on local budgets and their ability to deliver on things like public safety. And ultimately, we want to know how families are doing. So there is an indicator on household wellbeing.
Terry Gerton So as you look across all of those measures, what are the signals telling you right now?
Amy Liu Well, what we see right now is that the DMV region is absolutely ground zero for this administration’s efforts, and very effective efforts, to shrink the federal government in terms of workforce, spending and procurement and real estate. And what that is doing is showing up as a major downturn in the economic social trends here in the region in ways that are even more dramatic than what is happening nationally and in other large metro areas. And that is sending really strong alarm bells.
Terry Gerton And how’s that playing out, then, in the region’s unemployment? Let’s just start there.
Amy Liu Well, let me start with jobs, because I think what happens is, if we’re laying off a lot of workers, how’s that showing up on jobs? And first, I want to say that the region’s job loss has been dramatic, with job loss happening at twice the rate as the nation. I think when people think about federal job loss, it also translates to private sector job loss. I think we have to remind people the private sector industry is very tied to the federal government. And so when there were mass layoffs in the federal government, it triggered mass layoffs in the private sector. So the other thing I wanted to share is that the DMV Monitor shows that the amount of layoffs set off by the private sector, the nonprofit sector, and quasi-public entities rose by 139% in this region compared to only 4% nationally. So again, a really acute impact of job loss in this region.
Terry Gerton Is that playing out differentially across Maryland, Virginia and the district itself?
]]>
Amy Liu Yeah, one of the nice things about the DMV, if you come on and explore the tool, is that has data on every major core jurisdiction and county in the region. And when it comes to mass layoffs, one of the, and jobs, is we see really acute impact on the suburbs, particularly Montgomery County. And in fact, Montgomery County and the district is at the epicenter of the mass layoff done by the private and quasi-public entities because of the concentration of USAID contractors, because of the work of the NIH. And so you see Montgomery County being really at the epicenter of a lot of this impact.
Terry Gerton You were talking about jobs there, and the Trump administration is threatening additional reductions in force. Here we are at day three of the shutdown. What impact would you expect that to have on top of what’s already gone through?
Amy Liu Yeah, I think the additional mass layoffs is going to add just deeper pain in the region. And one of the things we, there’s been, again, a lot of attention on the District of Columbia, but we have to remind everyone that the majority of federal workers in this region live in the suburbs. Already, before what is going to be a second wave of mass layoffs, is the Northern Virginia suburbs have actually experienced the highest growth in unemployment in this region. And that is, again, a reflection of the fact that Fairfax, Arlington, are some of the largest homes to federal workers in the region.
Terry Gerton I’m speaking with Amy Liu. She’s a non-resident senior fellow at Brookings. Amy, let’s follow on from that because you mentioned earlier that you are tracking family wellbeing and obviously jobs is factor number one there, but talk us through more about how families in the region are doing and how you’re measuring that.
Amy Liu What we wanted to look at is the credit and financial wellbeing of families, their ability to pay for bills in this environment. We also wanted to see if demand for SNAP or Medicaid has increased during this period. One of the things I will, the DMV Monitor shows is the percentage of families that are now more credit constrained has gone up in this region, meaning their ability to pay bills, their ability to pay bills on time, to access credit is now getting harder and harder, and it’s affecting their credit scores. And so the share of families that are credit constrained has actually grown.
Terry Gerton And you’re also tracking some pretty significant changes in the real estate market.
Amy Liu We are, there are two indicators here. One is the sale of single family homes and the other is commercial occupancy rates. So I’ll just say on real estate, the reason why we wanted to look at home sales is that we’ve been hearing that the loss of jobs for federal workers may mean that we may lose people in this region who might need to go somewhere else to find jobs. And that’s a real concern for a lot of employees here, because being in the D.C. region is being able to access some of the best, most passionate public service-oriented workers in the country. And there’s a real desire to retain that talent. And what we found is that the home sales in this region have skyrocketed to 64% more homes on the market now than this time last year. And we believe that is a proxy for the fact that people are potentially selling to either move to another market or to maybe downside to renting if they can’t afford to stay in a home, but is something to watch, particularly because interest rates for lending has stayed elevated. So the fact that there’s been a spark in home sales here is concerning.
Terry Gerton And if the housing market, I won’t say collapses, but declines because folks need to sell those houses to move to more affordable living arrangements elsewhere, how does that underpin the local economy?
Amy Liu That’s a great question. And I think one of the things we have to remember is when workers lose jobs, they tend to spend less. And that dampened consumer spending shows up in restaurants and hospitality, and therefore impacts restaurant workers. It impacts their ability to pay for rent and pay for bills. And some of these workers may be entrepreneurs and they will also lose contracts. And what that means is less revenue collections for local governments. And so I think this goes back to a real cascading effect on the region’s economy and local governments to really ensure this region stays stabilized.
]]>
Terry Gerton There’s another source of revenue for this region, which is tourism. You’re measuring it in the DMV Monitor. How is tourism faring in this environment?
Amy Liu There are two indicators we look at for tourism. One is air passengers through our airports, and the other is hotel occupancy. And one of the things we find in the positive news side is that air passenger traffic in this region has actually increased since this time last year. And that is higher than what is happening in the rest of the country. So business travel, perhaps tourism travel, is still pretty robust here in and out of all three of our airports. That’s positive. What’s concerning, however, is that hotel revenues are dropping in the region. And so perhaps people aren’t staying as long or the volume is reduced, and you can see that in certain suburbs as well.
Terry Gerton So as we look at the shutdown, and no one knows how long it will last, maybe it will be short, but if it goes on for a while, how do you expect the impacts of the shutdown to show up in these metrics?
Amy Liu I think that these metrics are just going to continue to get worse. And one of the things I want to remind the listeners is that the DMV Monitor tracked the trends from January to June of this year. So these trends, which were very stark, I think reflected the immediate fallout of the downsizing the federal government’s made. But what has been interesting is ever since June, this region has sustained further federal actions that have continued to add uncertainty and instability in the region, so it’s going to be hard to see these trends level out. So since June, we’ve had National Guard deployment and increased ICE enforcement in the region. We know now we have a deferred resignation deadline of jobs and benefits and pay for workers that are going to hit. And now the threat of additional mass layoffs and cuts in procurement and contracts. All that does is put a lot of pause for a lot of families and businesses here about whether they invest further in this region. And that caution is going to continue to show up in these numbers, I believe.
Terry Gerton You’re tracking trends. Do you think these trends signal a permanent realignment in the region’s economy? Or is this something that is sort of a temporary blip and we’ll all go back to whatever used to be normal?
Amy Liu Well, first, I think that the downsizing the federal government is going to last. This is an administration that is simply eight months into its term. It is determined to continue to shrink the federal footprint. And I think it’s going to be very hard to restore a lot of those jobs and a lot of that spending. So I do think the federal government is going continue to be a major presence here, but it’s going to be lot smaller. The capital is not going to move, for instance. That means, however, a lot more opportunity for local leaders, the state, business sector to work together to continue to figure out how to further diversify this economy in ways that is less dependent on the federal government. And I do think there are some positive signs in that front, but there’s going to be just a lot of disruption in the meantime.
Terry Gerton So what advice do you have for local leaders and policymakers as they think about that diversification?
Amy Liu I think that what we’re seeing is a group of regional leaders beginning to come together to figure out what they need to do in the short term and then what they need to do in the long term. In the near term, local leaders are really interested in helping federal workers find jobs so they can stay here. And so yesterday, you may know, there was an announcement made of a new tool called Talentcapital.ai to help federal workers, match them to jobs across the entire regional economy in partnership with career coaches and employers and local workforce investment boards, the real desire to keep this talent here. That’s a near-term need. In the longer term, I think what we need to, what the regional leaders are trying to do is continue to lean into the region’s strengths in the economy, which is the strengths in technologies and defense technologies, the leadership in cybersecurity and IT. We are barreling towards an AI future where intelligence is going to be and continue to be at the epicenter of all business processes. This region has the capability to continue to lean into that if we invest in the startups and the ecosystem, the talent and the incumbent firms all to come together around that. So huge opportunities.
Copyright
© 2025 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.