Mixed Bag for Local Economy

"We're also seeing a really consumer-led worsening," Capital One chief executive Richard Fairbank said in meeting with investors and analysts. "Every day we obsess how bad could it get and the real answer, nobody knows how bad this environment could get . . . and we can't tell you how high our charge-offs will peak."

Sallie Mae of Reston said its profit declined sharply in part because company executives said they allowed the firm to lend money to students who had little prospect of paying it back.

Washington's role as the nation's capital brings economic stabilizers that other cities don't enjoy -- and different risks. A new administration could shift gears on defense and government spending, which could hurt the very sectors that are holding it up now.

On the other hand, 2008 is an election year, and no matter who wins, the change in administrations will eventually fill hotel rooms, bring a new flock of home buyers sniffing around Georgetown, and spur spending on everything from carpets to caterers.

Hotels are betting on the coming surge. The St. Regis, two blocks from the White House, just opened its doors after renovations designed to capture election-year travelers. Others hotels, such as the Hotel Jefferson up the street, are doing the same.

"It's going to be a very busy year, with a new administration, lots of visitors coming to town, which is positive for the real estate market," Odeen said.

For now, some business people say they've yet to experience significant effects from the downtown. Alan Warmund, president of Subway Development Corp. of Washington, which franchises about 1,000 Subway sandwich shops in the District, Delaware, Maryland and Virginia, said his customers are hungrier than ever.

"We have seen great sales increases in the third and fourth quarters of last year, and continuing on into this month we see positive gains," Warmund said. "I don't know why or how, but so far, so good."

Staff writer Zachary A. Goldfarb contributed to this report.