With congressional leaders unable to reach an agreement on federal funding levels and health care policy changes, the government shut down at 12:01 a.m. on Wednesday, with no clear resolution to the impasse or indication of how long it will last. Shutdowns typically involve hundreds of thousands of federal employees being furloughed or working without pay. Meanwhile, the Office of Management and Budget released a memo last week instructing agencies to prepare for mass firings in an as yet unsuccessful effort to pressure congressional Democrats to vote to keep the government open.
Since Trump took office a second time, the DMV region has been particularly hard hit by his efforts to shrink the federal workforce. According to a July report by the Richmond Federal Reserve, D.C., Maryland, and Virginia lost a cumulative 22,100 jobs between January and May of this year. The DMV region’s unemployment has increased at a higher rate than in the rest of the country, in large part due to federal layoffs, according to a recent report by the Brookings Institution.
If the shutdown lasts around two weeks—roughly a full pay period for most workers—Moody’s Analytics has forecast that the impact on the nation’s overall gross domestic product will be relatively low. But the D.C. region will bear the brunt of the hit, said Justin Begley, an economist at Moody’s Analytics who is the lead analyst for the District of Columbia. Nineteen percent of the area’s payrolls are from the federal government, as opposed to just 2 percent nationally.
“Those contractors are everyone from who is serving food in, you know, the cafeterias in the federal buildings to janitorial staff, to who is taking care of the landscaping,” said Loh. “Congress will still actually be working during the shutdown. It just won’t work as well, because none of these staff that help the place run will be there.”
But the current economic situation could exacerbate the effect of a shutdown. Moody’s Analytics estimates that the district itself will experience a decline in GDP from the second quarter of 2025 through the third quarter of 2026, with federal layoffs leading to a total loss of 35,000 jobs through the third quarter of 2027. In the larger D.C. area, Begley said that projected GDP decline will result in a recession for the second half of 2025. The private sector in D.C. and in the metro area is expected to be largely stagnant.
“I think a lot of federal workers—if they can’t find refuge in the private sector locally—will probably take the approach of, ‘I need to leave this area to find a job elsewhere,’” said Begley. “There’s just generally weak labor demands in the private sector for jobs that are similar to what certain laid-off federal workers may have been doing for the federal government.”
“That concentration of smarts is part of what makes America great, that there are all of these super-smart people who want to help the government run as well as it can. And if we lose that, that has implications for all of us,” said Loh.
Kirwan also believes that the continued threat of agency closures and job losses beyond the shutdown is even more concerning to federal workers. “I don’t think this is anything new from what we’ve seen compared to the past nine months,” he said. “It’s just a continued period of concern, rather than a new escalation.”
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