So, Donald Trump could cause another recession after all
Since Donald Trump took the reins of presidency, an estimated 103,452 out of the 2.4 million federal workers in the United States have been fired. The shocking numbers are merely an estimate of the troubling casualties of Elon Musk’s government efficiency team’s plan to cut down government spending.
Trump brands the mass firings as “fiscal discipline”—a convenient tagline that neatly sidesteps accountability. Thousands of newly unemployed federal workers are left grappling with joblessness, responsibilities, and upended plans. The fallout from this sweeping downsizing isn’t just a personal crisis, it has also directly hit a cornerstone of Washington, DC’s economy.
The fall in consumer spending has pushed DC’s economy to the brink of a recession
According to CNN, economists at Moody’s have sounded the alarm: Washington, DC is on track to slip into a recession as early as this year. With 17% of the nation’s 2.4 million federal workers calling the DC metro area home, the recent wave of layoffs has sent first-time applications for unemployment benefits into a drastic hike. The situation looks grim for the future too. Oxford Economists project that the region will lose an additional 33,700 federal jobs in 2025, compounding the economic fallout.
To make matters even more alarming, federal workers’ paychecks make up 1.6% of the total wages earned in the metropolitan area, and Oxford Economics forecasts that the DC metro will see $4.9 billion in lost wages this year alone due to federal job cuts.
The deep tie of DC’s local economy to government employment reveals that the city is quite literally built on the stability of federal spending. When people lack a steady income, consumer spending is bound to go down. The ripple effects of these cuts will thus show up seismically on the economic landscape of the nation’s capital in the coming months.
Local businesses in DC also face a crisis worse than one seen during the COVID-19 pandemic
The director of regional economics at Moody’s, Adam Kamins, warned that the impact of Trump’s layoffs will be immediately felt by consumer-facing industries, such as retail and hospitality. “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. There’s always a lag between when things are happening in the economy and when the data reflect those events,” he said to CNN.
With all those warnings on the table supported by the data by analysts, it seems that the capital city is bracing for an economic crisis born of so-called efficiency, leaving thousands to bear the cost of a government on a crash diet.
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