The region’s biggest economic generator — the federal government — is stalling.
Roughly 11,000 fewer Washingtonians were employed in May compared with April as the area’s unemployment rate ticked up to 5.7 percent, according to data released Wednesday by the U.S. Bureau of Labor Statistics.
It’s the first unemployment uptick of the year as the tightening in federal spending casts a ripple effect that analysts say will halt job growth for those who rely on the government.
| No spending, no jobs | ||||||||||||
| Unemployment rises in Washington | ||||||||||||
| May 2011 | Apr 2011 | Mar 2011 | Feb 2011 | Jan 2011 | Dec 2010 | Nov 2010 | Oct 2010 | Sept 2010 | Aug 2010 | July 2010 | June 2010 | |
| Washington metro | 5.7 | 5.4 | 5.8 | 5.9 | 6.1 | 5.7 | 6.0 | 5.8 | 5.9 | 6.2 | 6.3 | 6.4 |
| National | 9.1 | 9.0 | 8.8 | 8.9 | 9.0 | 9.4 | 9.8 | 9.7 | 9.6 | 9.6 | 9.5 | 9.5 |
| Source: U.S. Department of Labor | ||||||||||||
“The Washington area has hit its own soft patch,” said Anirban Basu, president and chief executive officer of Sage Policy Group in Baltimore. “And what’s happening is there’s spillover into other economies, most notably in contracting … so the government is not as forceful as it once was as an economic driver.”
Job growth is also slowing. May 2011 had just 2,100 more jobs than the prior May, anemic compared with the 20,400 jobs gained between April 2010 and April 2011. March boasted 48,300 more jobs over March 2010.
Experts said that, unlike other times of federal penny-pinching, the usual bounceback in spending may not happen.
“It’s going to take a longer time for the bounce to occur,” said Mark Amtower, a government contracting consultant in Howard County. “This economy just sucks — there’s no two ways about it. It’s the worst I’ve personally seen it.”
According to Basu, that’s because state and local governments continue to struggle as they grapple with their own budget deficits and funding cuts.
The result is a shaky future for the region’s 45,000 government workers and contracting community, which has reaped the benefits of more federal spending than any state in the nation, according to the Greater Washington Initiative.
Shawn Logue, a contractor for the General Services Administration, said procurement contracts are being scrutinized more and some are renewed for four months instead of one year.
Stan Soloway, head of the Professional Services Council, which includes the area’s top contracting firms, said the threat of a government shutdown this spring and the ongoing debate over the nation’s debt ceiling has many on edge about whether the next round of cuts will hit them.
“We certainly anticipate multiple years of budget tightness,” he said. “This is a different environment than in the past.”
However, in a national context, the Washington region is still faring well and boasts one of the country’s lowest unemployment rates.
Amtower noted that contractors tend not to be jobless for more than a few months.
According to Soloway, spending in technology and cybersecurity — a strong suit of suburban Maryland and Northern Virginia — is expected to continue.
“It’s just how the cuts will be implemented is probably the biggest question,” he said.
