Washington
CNN
—
Tyler Wolf was laid off last week from his job as an employment attorney at the US Department of Health and Human Services. The 32-year-old had been saving up to buy a home and planned to move in with his girlfriend this year.
Wolf is now planning to move out of his apartment near The Wharf, a trendy waterfront business district in the city, by early April to live with his parents in Virginia. He has also cut back on his spending.
The Trump administration’s overhaul of the federal government, carried out in large part by Elon Musk’s government efficiency team, has left tens of thousands in Washington without a job. That’s threatening a key economic engine of America’s capital city — consumer spending.
And with signs of strain already showing, economists at Moody’s say DC could slip into a recession as soon as this year.
Wolf has already adjusted his behavior accordingly as he looks for a new position in a competitive job market.
“I’m lucky that I don’t have children or a mortgage because it gives me a bit more flexibility, but this is definitely going to set me back quite a bit,” Wolf said. “Now I’ve been cooking at home, I try not to go out for drinks, and it’s been a bit disheartening seeing most open attorney positions here asking for a lot more experience than I have.”
There are about 2.4 million federal workers in the United States, excluding those employed by the military and the Postal Service — 17% of whom live in the DC metropolitan area, according to government data. So far, the Trump administration has fired at least 103,452 workers across the federal government nationwide (though some of those cuts are being challenged in the courts).
First-time applications for unemployment benefits in Washington spiked throughout February, likely reflecting contractor job losses, according to economists. That might just be tip of the iceberg: Forecasters at Oxford Economists project 33,700 federal job losses in the DC metro in 2025. And this year’s job market likely won’t be able to absorb all of those federal workers who are expected to be out of work, said Allison Shrivastava, an economist at jobs site Indeed.
The job cuts Oxford Economics forecasts for the DC metro would amount to $4.9 billion in lost wages this year; federal workers’ paychecks account for 1.6% of the total wages earned in the metropolitan area, according to the group’s analysis. Contractors and others who indirectly depend on the government add more, as well.
People tend to pull back on spending when they no longer have steady income, and nonessential goods and services typically get hit first — ultimately generate a ripple effect throughout the economy.
Alexandra Reid, who lives in Washington with her husband and dog, was laid off last month from her program specialist job at the National Institutes of Health. The 30-year-old said losing her job halved her household’s income; the couple will likely need to dip into their savings just to get by.
“I have stopped pretty much all spending on nonessentials since I received the termination notice, only making food, grocery, and transportation purchases as a protective measure,” Reid said. “And this is just a terrible job market right now to be in.”
On Thursday, a second federal judge ruled that that thousands of probationary employees who were laid off by the Trump administration must get their jobs back temporarily. Reid told CNN that the ruling would apply to her and is hopeful she’ll get her job back soon.
The impact on businesses and housing
Miloud Benzerga, owner of Timgad Café in the Ronald Reagan Building and International Trade Center, told CNN that he estimates foot traffic to his shop is down about 25% to 30% compared to January, before the Trump administration began to fire workers.
He said his café, which employs nine people, managed to survive the Covid-19 pandemic, but he’s not so sure that will be case this time around.
“It make me sad that a lot of people are losing their jobs, and of course, that has something to do with my business, too,” Benzerga said. “If it gets worse, we’ll have to close, and I am not the only one. I’ve talked with other business inside food court.”
“We’re hearing concerns from businesses about the overall reduction in local business activity but also about the federal cuts,” Chinyere Hubbard, president of the DC Chamber of Commerce, told CNN.
She said the chamber has started to see “a lot of interest” from businesses in its resources and events, such as an upcoming small-business expo.
Adam Kamins, director of regional economics at Moody’s, said that the impact of President Donald Trump’s layoffs will be immediately felt by consumer-facing industries, such as retail and hospitality, and that the economic pain is expected to be more widespread later in the year.
“The recession in DC will be noticeable during the second half of this year, but I wouldn’t be surprised if it actually started in March because we’ve already seen little indications of weakness,” Kamins said, adding that “there’s always a lag between when things are happening in the economy and when the data reflect those events.”
The metro’s housing market also suggests more people might be leaving the metro area amid Trump’s layoffs: Homes listed for sale began to pick up in late January, according to Realtor.com data, and were 56.2% higher in the week of March 8 compared to the same week a year earlier. That reflects a sharp acceleration from the second half of last year, when inventory growth hovered between 20% and 30%.
“So far, we’re seeing more homes on the market, and modestly lower asking prices, but the situation continues to evolve,” Danielle Hale, chief economist at Realtor.com, said in a statement. “While I expect many households will choose to stay in the area and pivot to find new job opportunities, some will likely choose to leave and retire or find a job elsewhere.”
“I’m more upset than anything because of the arbitrary nature of all this, but I do feel confident that I’ll get back on my feet — with time,” said Wolf.
