Link Between Federal Spending, D.C. Economy Shoots Down Some Myths
| ow we know why the economy in metropolitan all Washington hasn't gone to hell in a handbasket åÈ'las many suspected it would after the onset of the recession more than a year ago.</br></br>The federal government, as a new report shows, continues to be a rock-solid foundation supporting the local economy. It is by far the "most important supportÛ for the areaÛªs economy, according to authors of the report that was released this week by the Greater Washington Research Center. ThatÛªs a strikingly different tune from the one that celebrated the emergence of metropolitan Washington as a business center that no longer depended as much as it once had on the federal government.</br></br>On its face, the research center report is both reassuring and enlightening. It helps to explain, among other things, the seemingly inexplicable factors underlying the local economy's relative strength in a sharp business downturn. At the same time, it effectively explodes yet another myth about the local economy.</br></br>It had been widely assumed in recent years, for example, that the federal presence in Washington had become significantly less important than it was 15 or 20 years ago. Federal employment, after all, had declined substantially as a proportion of total jobs in the region during the Reagan years and metropolitan Washington had blossomed as a business center. The services sector had replaced government as the principal employer and, therefore, economic growth was being fueled by a burgeoning private sector in metropolitan Washington.</br></br>That was the conventional wisdom of the 1980s. Not surprisingly then, a substantial decline in services-sector growth has shaken confidence in what was generally perceived as a services-driven economy. The psychological impact of the downturn was made worse by the general assumption that government employment and spending for goods and services no longer provided the safety net that it once did. In short, the region was no longer recession-resistant, according to apostles of gloom and doom.