Trump’s Layoffs Push Washington, D.C., Towards Recession
Introduction:
The Trump administration’s sweeping layoffs of federal employees have sent shockwaves through Washington, D.C. Economists predict that the city will tip into a recession this year due to the job losses. This unprecedented situation contrasts with the nation’s overall strong economic outlook.
Layoff Surge in Washington, D.C.
Since the start of the Trump administration, over 10,000 federal employees have been laid off. These layoffs are part of the administration’s efforts to reduce government costs and improve efficiency. However, the impact on Washington, D.C., has been severe.
In the week ending February 15th, unemployment insurance claims surged to 1,695, up from 1,682 the previous week and 619 during the comparable week a year ago. Over the four weeks since Trump took office, over 5,455 initial jobless claims have been filed in the District of Columbia, compared to only 2,014 during the same period in 2024.
National Economic Outlook vs. D.C. Situation
The nationwide unemployment rate remains historically low, and forecasters predict robust economic growth this year. However, the surge in unemployment claims in Washington, D.C., stands out as an anomaly.
Excluding D.C., the number of Americans seeking jobless benefits in the first four weeks of both 2024 and 2025 has remained around 920,000. This underscores the unusual situation in the district.
Targeted Cuts and Probationary Employees
The Trump administration’s layoffs have targeted employees still in their probationary periods, as well as others. About 220,000 government employees had less than a year of experience as of March 2024, according to the Office of Personnel Management.
These layoffs are seen as part of a broader "large-scale reduction" in the federal workforce. The executive order signed by Trump authorizes the potential loss of up to 400,000 federal jobs over the next two years, representing about 15% of the current workforce.
Projected Economic Impact
Economist Adam Kamins predicts that the job cuts will push D.C. into a mild recession from the second quarter of 2025 to the third quarter of 2026. He estimates the city’s unemployment rate will rise from 5.5% to a peak of 6.5% by mid-2026, and its gross domestic product will contract for six consecutive quarters.
Strains on Lower-Income Residents and Labor Market
The layoffs are expected to have a ripple effect, as businesses that rely on sales to federal workers reduce their operations. This could strain lower-income residents who work in those occupations. The district’s poverty rate was 14% in 2023, compared to 11.1% nationally.
Federal workers who lose their jobs may struggle to find new opportunities in a cooling labor market. Many specialize in administration, project management, or information technology, fields with relatively few private-sector openings.
Long-Term Impacts and Challenges
Kamins expects many federal employees to leave the region to find work or consider career changes. If a new administration seeks to restore the lost jobs in four years, it may face difficulty finding qualified candidates.
Conclusion:
The Trump administration’s layoffs have created an unprecedented situation in Washington, D.C. The city is poised to enter a recession, while the nation as a whole enjoys strong economic growth. Lower-income residents and federal workers face uncertainties, and the long-term impact on the federal workforce remains to be seen.
