DC’s special status gets ripped up by DOGE’s job and cost cuts | The US capital usually enjoys a steady economy with stable employment. The cost-slashing campaign is causing unprecedented upheaval

> Many American cities have suffered after the disruption of a crucial hometown industry. The nation’s capital never has, until now.

> The swift and comprehensive campaign by President Donald Trump and his billionaire ally Elon Musk to rein in government spending is expected to throw a wrench into the economic engine that built modern Washington. Musk’s Department of Government Efficiency has fired thousands of federal employees, and wants to close agencies, abandon leases and tear up billions of dollars in government contracts.

> The district is expected to lose as many as 40,000 federal jobs, the city has estimated, or 21% of its federal workforce. That has civic leaders bracing for a spending chill at local businesses, turmoil in office and housing markets and reduced tax collections that could upend city finances.

> “I’ve been in this business a long time, more than three decades, and I’ve never seen a situation where our forecast has so much uncertainty,” Glen Lee, the chief financial officer for the District of Columbia, said in an interview. Adding to the pressure, the district is facing a major budget squeeze that could result in deep cuts to police, schools and other city services.

> Workers caught up in the federal purge meanwhile are calculating how far their savings can stretch. Many are putting off big decisions about their careers or moving while waiting to see how bad things will get.

> Jenny Carlson Donnelly, an entomologist who had been working on malaria issues at the US Agency for International Development, started to look for a new job after the Trump administration all but shut the agency. Donnelly isn’t sure whether she and her husband and two children will be able to stay in the home they bought in the Washington suburb of Laurel, Maryland, in 2023.

> “Not knowing whether I’m going to find a job in a timely manner and if we can pay the mortgage and the bills is stressful,” Donnelly said. “We have to take things week by week, and we’re not the only ones.”

> Legal battles over DOGE’s cutbacks have afforded a bit of short-term security to workers, as judges have in some cases forced the administration to bring workers back, even if temporarily. Other fired federal workers are falling back on severance or buyouts while they weigh their next step.

> Still, the unemployment rate in the capital rose to 5.6% in March, the highest since January 2022, according to data from the Bureau of Labor Statistics. And there are signs of ripple effects spilling into the region’s private sector. In Maryland, where many contractors are based, WARN notices by private-sector companies planning to reduce staff have spiked since January.

> Washington could fall into recession, albeit mild, by later this spring, according to Moody’s Analytics. On top of that, economists surveyed by Bloomberg put the probability of a US recession in the next 12 months at 30% — and some are putting even higher odds on a US downturn as a result of Trump’s tariffs. That has Lee preparing for lasting repercussions.

> “This is not like a recession where you expect a couple years of retrenchment,” Lee said. “We don’t see that. We see this as a transformation.”

> Washington tends to be a bastion of high salaries and stable jobs even in the worst of times, since the government often boosts spending to stimulate the wider US economy when it’s ailing.

> Since 2000, Washington has had an average unemployment rate of 4.1%, trailing only Honolulu and Oklahoma City among 56 large metropolitan areas, according to Bureau of Labor Statistics data. Only Oklahoma City, another hub of federal workers, had less variation in its jobless rate over that span.

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