The word has been uttered for months by workers receiving their layoff notices, homeowners waiting for their houses to sell and business owners gazing bleakly at their balance sheets.

Experts who study the local economy had refrained from using the term, in part because its psychological impact hits harder than other labels: downturn, slowdown, slump.


It is one thing to say the economy's growth is slowing, quite another to say the economy is actually shrinking -- especially because there is no agreed-upon definition of a local recession.

But now, with a host of new statistics and other indicators out, many experts are finding that no other word will do.

The metropolitan area lost 3,300 jobs from October 1989 through October 1990, and almost surely will register a net job loss for 1990. In 1989, by contrast, the Washington region created 63,700 new jobs.

Applications for unemployment benefits have risen 65 percent in the last year. In Northern Virginia, applications have more than doubled.

State and local governments are seeing sharp reductions in tax revenue because of the slowing economy. Facing large budget deficits, several have announced layoffs.

"People have been telling the Washington metropolitan area it was recession proof for years, and they were wrong," said economist Michael Sumichrast. "I think Washington is in a recession."

A number of local economists recently have declared recessions in the jurisdictions they oversee. Roy L. Pearson, director of the College of William and Mary's Bureau of Business Research, said last week that income after inflation and the number of jobs both were falling in Virginia, a concurrence not seen even in the deep national recession of 1982.

Alan M. Gayle of Crestar Bank in Richmond also has declared a recession in the Old Dominion, based on steady declines in the index of leading indicators that his bank compiles for the state. And William Treacy, chief economist for Baltimore-based MNC Financial Inc., said last month that both Maryland and the Washington area were in a recession.

These pronouncements come as no surprise to business people of all stripes, who were noticing falling sales and profit long before the statistics turned sour.

"What do you mean a softening economy? This is a recession," snorted Lew Wessel of the accounting-personnel firm Don Richard Associates. "Everybody is acting as if we were in a recession. No matter where I am, whether it's a cocktail party or playing golf, everybody talks about it. Nobody lies about how they are doing anymore."

The economy here has turned downward before, but never quite like this. In 1982, the region lost 12,000 jobs. It was a severe blow, but one caused almost entirely by cutbacks in federal government jobs, which limited the extent to which the damage rippled through the economy. Before that, the effect of national downturns was muted here because so much employment was with the federal government. The booming growth of the private sector in the 1980s added to the region's wealth, but increased its vulnerability.

"The interesting thing about this recession is it's different. You can't point to one condition {such as rising oil prices or high interest rates} that caused it," said Stephen Fuller, chairman of the department of urban planning and real estate development at George Washington University. "Part of the problem here is that the slowdown was generated by our success and our exceptional growth rate. Everything went too fast and there were parts of the system that couldn't maintain that pace."

The difference between a recession and a downturn is the difference between staying afloat and sinking beneath the waves, and such characterizations are not made lightly. Consumer confidence, already at a low ebb, probably will decline further if people are convinced the economy is sinking. As consumers become even more concerned about their financial future, they likely will cut back even more on spending -- driving the economy down further.

"I feel a great responsibility about making statements of that magnitude. Declaring a recession is a subjective process, where we cross from slow growth to no growth to an actual drop in activity," Gayle said. Nonetheless, he added, "We believe the Washington, D.C., area is in recession."

However, some statistical evidence is ambiguous. The local unemployment rate is only 3.4 percent, well below the national rate of 5.4 percent. Retail sales in the first nine months of the year were running 7.2 percent higher than for the same period last year, well above the pace of inflation.

While the area's 3.4 percent unemployment rate is relatively low, it has risen from 2.6 percent a year ago. One reason it has not gone up more is that the labor force -- the number of people working plus those seeking work -- is no longer growing. From October 1989 through October 1990, only 9,000 people were added to that pool, which totals 2.2 million. If more people were moving to the area looking for work, or staying here seeking jobs after being laid off, the unemployment rate would be higher.

"If a lot of people showed up here, they wouldn't find a job," said Richard Groner, chief of labor market information for the D.C. Department of Employment Services.

The retail sales figures, which are current only as of September, may not yet fully reflect the impact of the slowdown, said Treacy of MNC Financial.

"There is a lag," he said. "If you lose your job in October, it doesn't hit your spending right away."

Moreover, the increase is in comparison to 1989, which itself was a bad year for retail sales, he said. And the figures are not adjusted for inflation, which has been running higher this year.

Another reason for some positive statistics: Even if the local economy is in a recession, it may not be deep and it certainly is early. Most people are still working, many businesses are still making profits.

"We are not talking about a depression here," said Treacy. "We are not talking about a third of the work force out of work. Yeah, the economy is shrinking. But it is not dire yet."

Some of the worst effects probably are psychological. Businesses that were started up in the 1980s, as many here did, have known nothing but double-digit annual growth. When sales began to slow and profits dropped, many business owners were horrified.

"This economy has been sheltered in a structural way like no other in this country," said John Franklin, managing director of the Washington office of the executive-recruiting firm Russell Reynolds. "People here are very naive about how to manage a downturn, while people in the Southwest have been through it and people in the Midwest are used to it."

Among the area's large business sectors, only health care appears to be in good shape. But the degree of weakness elsewhere varies from industry to industry.

While the retail sales figures indicate that at least some stores are posting robust sales, for instance, every aspect of the real estate sector is down.

Sales of new homes were 39 percent lower in the first 10 months of this year than they were in 1989 and the vacancy rate for commercial office buildings in the metropolitan area is 15.7 percent, two percentage points higher than a year ago. The construction industry has lost 14,000 jobs in the last 12 months.

"The real estate industry is in a depression. I don't think recession is the right word," said economist Sumichrast.

Economic terminology is subjective. One popular definition of a nationwide recession is a significant decline in the gross national product for two consecutive quarters. The GNP, which is the total production of goods and services in the economy, is a statistic released four times a year by the Commerce Department.

But there is no counterpart to GNP on the state or metropolitan level. Proxies include the growth of jobs, which has turned negative, as measured by the government's monthly survey of businesses, changes in retail sales, changes in personal income and a variety of indicators concerning individual industry sectors.

Geoffrey Moore, a Columbia University expert on business cycles, said the trick is to pay attention to the "three Ds" -- duration, depth and diffusion. A recession has to last a while, it has to hurt, and it has to touch nearly every sector of the economy.

One sign it has hit widely is the abundance of anecdotal evidence, of stories told on the Metro and at dinner parties of layoffs and closings and bankruptcies and foreclosures.

One small publishing business, for instance, recently advertised for a technical writer. It was a position that also had been open about a year ago. Then, the business got 30 applications. This time, 200 to 250 re'sume's have come in the door.

The business owner asked not to be identified for fear he would get more applications.

Staff writer Jacqueline L. Salmon and researcher Margaret K. Webb contributed to this report.