Experts see a bumpy road to recovery for region's economy

Sara Kline, associate economist, Moody's Analytics. Kline, who tracks government labor data in the Washington region from month to month, said she expects the unemployment rate here to edge higher in the coming months. That's bittersweet news, she said, the sweet part being that the higher rate will reflect a return of long-term unemployed people to the job market.

"We're going to see those people come back," she said. "This will put upward pressure on the unemployment rate. We'll see it tick higher. It's not a good thing, but not entirely a bad thing if you see people return to their job search looking for new opportunities."

Kline said she will be watching private sector job growth, but expects small businesses to continue to struggle. How they do, she said, could determine whether the long-term unemployed continue in the new year to return to the job market to search for employment or drop out of the labor force again.

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Alan Chvotkin, executive vice president and counsel of the Professional Services Council, a national trade association representing 330 government contractors, said he expects the sector to remain strong despite the Obama administration's move to return some defense work to the federal workforce.

"I don't expect it to be a tsunami affecting government contracting in the Washington, D.C., area," Chvotkin said. "We're not going to be immune. In terms of the proportion, I would think more of that would take place outside of the metropolitan area rather than in the Washington metropolitan area."

Still, he said, there's a real possibility that overall federal spending levels in metropolitan Washington could decrease, which would hurt the region. "The appropriations process always has an impact on contracts ... That's going to have a demonstrable impact" on the area, he added.

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Gregory H. Leisch, chief executive of Delta Associates, a commercial real estate research and consulting firm, said he expects fourth-quarter retail sales in the region to improve significantly from the same periods in 2009 and 2008.

"We'll find [sales] this fourth quarter compared to last fourth quarter [will be] 3 to 5 percent better than last year," Leisch said. "Last year we lost 50,000 jobs; this year we're going to gain 30,000 or 40,000 jobs. For that reason alone we'll do better ... The jobs we're adding are high-income. The nature of the jobs are supportive of retail."

Evidence of the growth in retail sales is the accelerated hiring that has taken place in the sector. "Retail employment is up, and it's been one of the healthier segments of employment growth," he added. "That says a lot. Retailers are back in the market employing people. They do so only when there's meaningful improvement in their business."

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