DC Economy Takes Gut Punch As Trump Takes Shears To Federal Bureaucracy

President Donald Trump’s federal cuts are making a dent in the government-driven economy of Washington, D.C., Axios reported Tuesday.

Since taking office, the Trump administration has focused on making sweeping cuts to the size and scope of government through initiatives like the Department of Government Efficiency (DOGE). The administration’s push to cut federal largesse is contributing to an economic slowdown in the Washington metropolitan area that Axios described as the “DOGE recession.”

Indicators of a local economic contraction include city statistics showing a year-over-year increase in the city’s unemployment rate by 12.2% in February, and a decrease in spending at big retailers, as shown by credit card data obtained by the Washington Post.

As a result of the Trump administration’s cuts, residential building permits in the area have dropped 33%, and the D.C. chief financial officer anticipates a 1.9% contraction in the city’s economy, Axios reported.

In Washington, the city with the highest proportion of its workforce employed by the federal government in the country, the outlet reported that nearly 80% of residents believe the cuts to federal programs and jobs will hurt the local economy.

Excluding active-duty military personnel, over 3 million people were employed by the federal government as of November 2024, according to the Pew Research Center. Even the agencies that did not increase their workforce saw a substantial rise in spending under the Biden administration.

On Feb. 19, the President signed an executive order to begin reducing the size of the federal bureaucracy, followed by another executive order on March 14 to make further cuts. In line with the president’s orders, the Department of Education announced in March that it would be slashing its workforce by nearly 50%, and the administration has also moved to dismantle the U.S. Agency for International Development.

The cuts are not only affecting federal employees but also government contractors who benefit from hundreds of billions in government deals each year, according to The Washington Post. In February, the General Services Administration directed agencies to identify unnecessary contracts, a move expected to result in tens of billions in savings for taxpayers.