The 1,100 employees of the National Research Council near the Mall do not work for the federal government, but they might as well: All of them were notified recently that if federal workers go on furlough next week, they probably will, too.

If Congress and the Bush administration fail to reach a budget agreement that will forestall automatic spending cuts, the council is contemplating "furloughs of all staff, including executive management, without pay for one or two days a week," to offset the loss of revenue from federal contracts, according to a memo to the staff from Chairman Frank Press.

The local impact of federal-worker furloughs and the spending cuts, known to budget linguists as a "sequester," would reach far beyond the relatively small portion of the area work force that is directly employed by the federal government.

Stores where federal workers shop would have fewer sales, companies and nonprofit groups that do business with the federal government would see some contracts dry up and the companies that serve those employers -- providing janitorial services, for instance -- would lose business.

A furlough probably would have to last several weeks to have a severe economic impact on the Washington area. But the local economy is in a particularly fragile condition at the moment, facing serious slumps in real estate, tourism, retailing, banking and defense contracting. Even a short furlough could scare residents into cutting their spending further, some experts on the area economy believe.

"I don't think a sequester even has to take place. I think there is an economic impact just by the threat of a sequester," said Richard Groner, chief of labor market information for the D.C. Department of Employment Services. "People are not going to run out and spend money, and companies are going to put their plans on the shelf. This is happening when the metro area basically has a weak economy."

The possibility of furloughs along with the fear of furloughs are an ironic development for a region that once prided itself on a stable economy driven by stable federal employment.

"What has been our strength becomes our Achilles' heel," said Stephen S. Fuller of George Washington University. A sequester "is one of those tipping events. Once it happens, people will accept the fact that we're going to hell in a handbasket."

During most of this decade, the metropolitan area's private sector experienced tremendous growth. The number of civilians working for the federal government stayed roughly the same at about 400,000, including intelligence agencies. Federal employment dropped as a share of the work force, from 23 percent in 1979 to 16.3 percent in 1989.

That decline, however, is misleading. Many of the services once carried out by federal workers have been transferred to private contractors, and many of those contractors are in the Washington area. A large number of the defense consultants in Virginia, the biotechnology firms in suburban Maryland and the printing companies everywhere in the region would not exist without government business.

More indirectly, many retail enclaves throughout the area depend heavily on federally employed customers.

"The majority of our customers are federal workers," said the manager of a shoe store in the underground mall at L'Enfant Plaza. "We have Ag, HUD, GSA, DOT, IRS, the Smithsonian, the Comptroller of the Currency. Quite a few. I'm sure it would have an impact."

A study by Pamela Manfre of the real estate consulting firm Robert Charles Lesser & Co. in the District estimates that 62 percent of all area employment is connected to the federal government directly or indirectly, if all payroll and contracts are included and a "ripple effect" factored in. As a share of total income in the Washington area, the federal government and its indirect spending account for 65 percent.

Twenty-eight of the roughly 150 public companies in the area reported on a Washington Post survey that more than 50 percent of their revenue last year came from federal contracts, and there are hundreds of small private contractors for whom the same is true.

"If sequestration occurs, my perception is that it will affect us all. There will be cuts in all of our {government-contracting} areas," said Laura Henderson, president of Prospect Associates Ltd., a Rockville company that has health-related contracts with several agencies.

Although some areas of the Defense Department are exempt from the automatic budget cuts, contracts are not. Most area defense contractors are assuming that contracts will not be canceled outright, but they fear that those won but not signed will be delayed, canceled or frozen.

"That will cause an immediate contraction in business opportunities," said an official of an area defense firm. "I think most of us find it incomprehensible that cuts of this size would happen."

Already, defense companies have seen their federal contracts slowing down over the past two years. Federal contracting in the Washington area has fallen to $9.6 billion in 1989 from $11.3 billion in 1987. And even if budget negotiators reach an agreement, it is likely to call for further cuts in defense spending.

Staff writers Sandra Sugawara and Mark Potts contributed to this report.