In metropolitan Washington, Fairfax County has become the indisputable economic powerhouse.
To the extent that the area as a whole is protected from a real decline that would be translated into recession, it is because of continued growth in Northern Virginia and particularly in Fairfax.
Not only does this county have the highest family incomes in what overall is a relatively affluent metropolitan region, but also it is the envy of other jurisdictions in terms of business expansion. In the 10 years from 1971 to 1981, this growth included 1,075 new companies; 14.9 million square feet of new business building space and about 55,000 new jobs.
To be sure, housing and automobile dealerships are suffering in the county, and they are big business in Fairfax. But more than elsewhere in the Washington area, Fairfax business leaders have good reason for their optimism that current economic woes are just a temporary slowdown in the rate of expansion.
Philip M. Reilly, a beer distributor and president of the Fairfax County Chamber of Commerce, says he thinks that recovery from national recession will start in the second or third quarter this year. And he emphasizes something very important for the local economy: "I don't think we have stopped government growth and I'm not certain we ever will."
What President Reagan has accomplished is a slowdown in government growth but not an absolute reduction, Reilly told county business leaders at an unusual panel on the economic outlook at a chamber luncheon last Friday.
The panel was unusual both in its composition--with two leading spokesmen for America's labor movement pitted against the chief economist of the U.S. Chamber of Commerce and a college economics professor--as well as in the degree of agreement on goals.
Both U.S. Chamber economist Richard Rahn and International Association of Machinists and Aerospace Workers President William Winpisinger emphasized, for example, that the Reagan administration has not reduced federal spending at all. What has happened is a reduction in the rate of growth of federal spending.
Rahn, Winpisinger and other panelists were in sharp disagreement, however, in their assessments of current problems and policies. Among other highlights:
* Rahn endorsed full employment, a concept that supposedly is part of the law of the land and requires federal action to put people to work. It is a law apparently overlooked at a time when the unemployment rate nationwide is 9 percent. "To imply that the chamber or businessmen don't care about the unemployed is nonsense. It's not good for business," Rahn stated.
* Winpisinger charged that the Reagan administration has only exchanged double-digit inflation for double-digit unemployment. "I was more optimistic 60 days ago . . . I can't see a single scrap of evidence today of a good trend," the union chief added.
* Robert Petersen, secretary-treasurer of the Columbia Typographical Union and president of the Washington Central Labor Council, complained that "basic human issues" are being ignored by the Reagan White House. Of 150 area unions, "all have substantial unemployment," he asserted.
* Philip Coelho, chairman of the economics department at George Mason University, said it is impossible to alter the course of economic trends for the short term and policymakers should concentrate on the longer term. In effect, he said, the short-term costs now being suffered are "worth the long-term benefits" of a more stable economy and lower rates of inflation.
Rahn said flatly that "things are going to be getting a whole lot better," and he noted that most union members and the U.S. Chamber are in agreement in their opposition to higher taxes at this point--a point Rahn and other representatives of his group made personally to Reagan last week.
Among American economists, Rahn is one of the most optimistic about the shape of the economy this year. The recovery from recession will start as early as the first quarter and will be well underway by the second half of the year, with year-to-year growth in real gross national product at 1.2 percent in 1982 and 5 percent in 1983, Rahn projects. He forecast that the Consumer Price Index would rise 7.5 percent this year and decline to 6.5 percent in 1983.
His optimism is based on a large, pent-up demand for housing and durable goods relative to abnormally low levels of demand and production in the fourth quarter of last year. A decline in mortgage interest rates to the 14 to 15 percent level will begin activity in this depressed sector and auto sales will improve "markedly" within the next three months, under the Rahn scenario.
As disposable income improves because of lower taxes and reduced rates of inflation, "the expectation of lower inflation makes people feel wealthier as the purchasing power of their savings is higher," he contends.
Coelho also is optimistic about the national economy and he sees a bonus for metropolitan Washington. More major firms will find it advantageous to locate either a branch or main office in Washington, even without a boost in the federal bureaucracy.