George Mason University regional analyst Stephen S. Fuller has just dumped a big barrel of rain on the District's recent economic parade.

The capital's unemployment rate has dropped to a nearly 10-year low, its housing market soared last year and businesses are expanding beyond downtown's office corridors.

But Fuller projects that the District's economy will peak in 2001 at $51.5 billion and then drop in each of the next four years. By then, the District's output will have dropped by $1 billion, adjusted for inflation. "You can't assume the District economy stays healthy just because it's had a couple of good years," he said.

The forecast, presented at last week's George Mason University regional outlook conference, is grimmer than some others.

RFA Dismal Sciences, a research firm in West Chester, Pa., predicts that D.C. economic growth will slow to an annual rate of just 0.2 percent in 2001, but will pick up slightly, to 0.3 percent the following year.

Fuller expects the D.C. economy to slow down as the national economy weakens in the next few years.

More troubling, he says, is the shift he expects in the makeup of the District's work force.

Today, the District's sunnier economy is mostly due to a spurt in construction, including the new District convention center and downtown office buildings, which will add 5 million square feet of commercial space in the city, according to the Grubb & Ellis brokerage firm.

"Construction has carried the District for a couple of years, but then it's over for a couple of years more until the cycle repeats itself," Fuller predicts.

And as construction workers go elsewhere and as other D.C.-based employees retire or move away, they're likely to be replaced by lower-paid workers in the hotel industry, retailing, restaurants and personal services, where some job growth is expected, Fuller said. That would be a boon to low-skilled District residents who are on the margins of the job markets and who aren't in line for tech positions. But the District also needs to attract a bigger share of the region's technology growth, Fuller said.

Today, the District has a comparative handful of the region's estimated 350,000 technology jobs.

Mayor Anthony A. Williams's hopes for increasing technology employment is focused on a 300-acre wedge between Massachusetts and New York avenues west of Union Station, where much of the land is already vacant.

Qwest Communications International Inc. and MCI WorldCom Inc. are developing communications centers in that area to be close to a major fiber-optic communications network near Union Station. XM Satellite Radio Holdings Inc., which is building a pay-to-listen broadcast service for motorists, also is moving into the area.

"It's started small. There aren't a lot of jobs yet, but there will be," said Marc Weiss, a former D.C. economic development consultant now with the Woodrow Wilson Center.

What the District needs, Fuller and Weiss agree, is a stronger strategy aimed at attracting technology start-up companies to the city, where lower-cost space can be created in places like the New York Avenue corridor.

Not an easy prescription to fill, but to start, the city needs to figure out what kinds of tech workers it hopes to get, and how it hopes to lure them.

District Downturn?

Stephen S. Fuller's new economic forecast projects a drop in the D.C. economy in 2002.

Gross Regional Product percent change, in billions of 2000 dollars

2000 2001 2002

District of Columbia 0.75%/$51.22 0.45%/$51.45 -.87%/$51.00

Suburban Maryland 3.64%/$75.06 2.96%/$77.28 2.74%/$79.40

Northern Virginia 4.58%/$91.91 3.96%/$95.55 4.06%/$99.43

SOURCE: GMU Mason Center