In throes of recession, D.C. stands apart

Federal spending insulates region

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Overall, thanks to federal largesse, the Washington region’s growth never stopped throughout the Great Recession. In fact, growth in the Washington area’s estimated $400 billion economy surged by 6.9 percent from the onset of the recession in December 2007 to the middle of this year, according to Brookings estimates. That compares with a bare recovery average of 1.1 percent in other major cities.

To be sure, Washington has other strengths besides the federal government — professional sports franchises, beautiful monuments, world-class museums and opera, and notable technology centers along the Interstate 270 and Dulles corridors, to name a few. But few doubt that the foundation of the city’s success is the omnipresence of the feds.

A list of the top Fortune 500 companies based in Washington reveals the overwhelming draw of the government. It includes three defense and aerospace giants — Lockheed Martin, Northrop Grumman and General Dynamics — and mortgage giants Freddie Mac and Fannie Mae. Freddie and Fannie were prosperous private employers, but they are now fully owned by the government, which has spent $160 billion propping them up in the wake of the mortgage crisis.

While businesses in other cities have to contend with the vagaries of the global economy and survive for the most part by dint of their prowess, superior products and disciplined performance, getting by in Washington is relatively easy.

Once Washington spending programs are established — whether weapons systems or mortgage aid — they hardly ever get shut down, as long as companies find champions in Congress and invest in adroit campaign and lobbying strategies.

Because of the seemingly never-ending federal largesse, Washington’s extensive contracting industry has thrived. Contract work was fed by the mammoth bank bailout and stimulus bills and the steady flow of appropriated funds, which totals more than $1 trillion each year.

The cornucopia of an estimated $84 billion a year in federal contracts has made high-paying professional and business services the biggest category of employment in Washington, typically constituting nearly 800,000 of the 3.5 million jobs in the area.

The federal government, by contrast, supplies about 372,000, or 11 percent, of the area’s jobs, with state and local governments supplying another 372,000 or so, according to the Greater Washington Board of Trade.

The Washington economy also recovers from downturns more quickly.

A study by Delta Associates found that Washington outpaced every other major city in job growth in the past year, totaling 41,800 in the year ending in July.

That growth was more robust than before the recession and strong enough to put Washington on track to recoup the number of job losses by the middle of next year — years ahead of the rest of the country, the consulting firm estimated.

Of the nearly 42,000 jobs opened up in the past year, nearly half were with the federal government and about 13,500 were with government contractors.

“During this recession, the only place that was hiring was the government,” said Jim Dinegar, president of the Greater Washington Board of Trade.

The wars in Iraq and Afghanistan fed continuous spending and hiring in Washington for a decade, and last year’s stimulus bill added “an enormous shot in the arm” to the local economy, he said.

For those lucky enough to nab a federal job, the pay is also sweet. The Census Bureau reported that federal employee compensation and benefits last year averaged $123,049, twice as much as average private-sector compensation of $61,051.

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