The District has lost about 2,600 jobs on net since October, even as the metropolitan area has added about 30,000. Wage growth has stalled for District residents, and economists predict that wages will fall over the rest of the year. City unemployment is not rising, but it remains well above the national average, especially east of the Anacostia River.
Economic indicators, along with economists who follow the region closely, suggest that the weak job market stems mostly from government pulling back. The job losses and salary-sapping furloughs from sequestration, while still not as severe as initially feared, appear to have grown too powerful for the city’s still-growing private sector to offset.
In June, the District was down 6,000 federal jobs from the same time a year before, according to the Labor Department.
“The main driver of what’s going on in the job picture is that the federal government has been shedding jobs,” said Fitzroy Lee, the District’s deputy chief financial officer and chief economist. He added, “This might be the first glimpse of the likely effect of sequestration.”
The broader region’s economy remains relatively healthy, data show. Only in the District is the story more muddled.
Construction is humming. Washington has returned to its recent historical average for new building activity, while many U.S. metro areas remain only about halfway back to it, said Jed Kolko, the chief economist at real estate Web site Trulia. The three-month average for new housing permits in the city was up more than 20 percent in June from a year before. The vacancy rate for commercial office space in the District is 9.3 percent, well below the regional average.
Tourism revenue is rising in the city. Tax collections — sales, income and property taxes — are up from this time last year, suggesting continued economic growth.
That good news comes with some big and occasionally strange caveats. For example, the hot construction market has barely brought any new construction jobs to the city over the past year — a paltry 167 of them, according to the Labor Department. That is probably because most contractors are based in the suburbs and relatively few construction workers live in the District.
More broadly, federal budget cuts appear to be taking a growing toll on the city, even compared with its surrounding suburbs.
Wage growth has drooped among District workers and has lagged in the nation as a whole for nine straight quarters. Some economic forecasters expect wages to actually fall this year in the District — IHS Global Insight predicts a 0.4 percent decline, followed by a rebound in 2014.