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I have not read the entire debt ceiling bill approved by Congress--like I have the time. But here is what I think will happen to the local economy.
1. The federal workers will not be facing layoffs--for now. Stay tuned when the super-duper debt reduction commission starts wielding the axe in 2012.
2. In the short term, I think we will begin to see more hiring freezes and benefit cuts at more federal agencies. Less money will be available for contractors at non-defense related agencies too.
3. Some defense-industry Beltway Bandit contractors will experience revenue declines and job cuts. I think the smaller, niche contracting firms will encounter serious financial difficulties from lost government contracts. The big boys like Lockheed, Boeing, SAIC and others will weather storm better due to their significant capital resources and connections to powerful people in government. More unemployed IT people will be pounding the pavement around the DC region. This is good news for potential employers looking to hire desperate software programmers and internet network engineers.
4. The states could be facing a huge shortfall in funding for unemployment. If you are collecting unemployment insurance in VA, MD or through DC; you should be very worried right now. the debt ceiling does not address the unemployment problem in this country at all.
5. The loaded people living in some expensive zip codes can still enjoy the Bush tax cuts through the end of 2012. I don't know if this will help the local economy or not. But I wouldn't worry about the caviar and Moet crowd in Potomac, MD or Great Falls, VA.
6. DC housing prices will continue to rise but at a modest pace. If Congress and the White House adopt a scorched-earth approach to federal agency budgets, we are going to witness some serious unemployment increases for NoVA, DC and suburban MD. Then, you might witness double-digit housing prices declines all over the place.
If big corporations lose subsidies and/or tax breaks from the debt reduction measures, some top-flight K Street firms might kick some lobbyists to the curb. No sense in paying gigantic fees to firms if there is not much business left on Capitol Hill. An unemployed lobbyist is a loss of a six-figure income and this will hurt our local economy.
Ironically, I think the law/lobbying firms will be ADDING more people in the short term because their clients are scared sh*tless about the outcome of the budget cuts. Send more reinforcements in $1,200 pin striped suits!!!!
7. If the job situation worsens for lower-income households in DC and in the surrounding suburbs--which will likely happen--you will see a noticeable uptick in the crime rates. Property thefts and street muggings will be occurring in the more traditionally safer neighborhoods in upper northwest and in the Georgetown/Glover Park. The increase in crime will drag DC housing prices even lower.
All-in-all...the debt deal could have been worse to the DC economy. I think we dodged some serious bullets in the short-term but I am nervous when the next round of government spending cuts gets through the super-duper debt reduction commission.
With so many boomers approaching retirement I don't think large scale federal layoffs are too likely. Instead it will mean slower hiring as more people retire and feds will have to do more with less. I also think Federal perks are likely to be affected.
Like yourself, I think DC will be fine for now, but the real meat of what will come of this may have some pretty drastic consequences for the area. Particularly in defense.
I have not read the entire debt ceiling bill approved by Congress--like I have the time. But here is what I think will happen to the local economy.
1. The federal workers will not be facing layoffs--for now. Stay tuned when the super-duper debt reduction commission starts wielding the axe in 2012. Agreed...
2. In the short term, I think we will begin to see more hiring freezes and benefit cuts at more federal agencies. Less money will be available for contractors at non-defense related agencies too. Agreed....
3. Some defense-industry Beltway Bandit contractors will experience revenue declines and job cuts. I think the smaller, niche contracting firms will encounter serious financial difficulties from lost government contracts. The big boys like Lockheed, Boeing, SAIC and others will weather storm better due to their significant capital resources and connections to powerful people in government. More unemployed IT people will be pounding the pavement around the DC region. This is good news for potential employers looking to hire desperate software programmers and internet network engineers. I just think a lot of people will start to leave the area and many will quit arriving once it's evident moving to the area doesn't guarentee employment.
4. The states could be facing a huge shortfall in funding for unemployment. If you are collecting unemployment insurance in VA, MD or through DC; you should be very worried right now. the debt ceiling does not address the unemployment problem in this country at all. Yep.
5. The loaded people living in some expensive zip codes can still enjoy the Bush tax cuts through the end of 2012. I don't know if this will help the local economy or not. But I wouldn't worry about the caviar and Moet crowd in Potomac, MD or Great Falls, VA. They're the Obama tax cuts.
6. DC housing prices will continue to rise but at a modest pace. If Congress and the White House adopt a scorched-earth approach to federal agency budgets, we are going to witness some serious unemployment increases for NoVA, DC and suburban MD. Then, you might witness double-digit housing prices declines all over the place. Disagree, only because the national housing market is still 20% from rock bottom which will correlate to a minor decrease in DC.
If big corporations lose subsidies and/or tax breaks from the debt reduction measures, some top-flight K Street firms might kick some lobbyists to the curb. No sense in paying gigantic fees to firms if there is not much business left on Capitol Hill. An unemployed lobbyist is a loss of a six-figure income and this will hurt our local economy.
Ironically, I think the law/lobbying firms will be ADDING more people in the short term because their clients are scared sh*tless about the outcome of the budget cuts. Send more reinforcements in $1,200 pin striped suits!!!!
7. If the job situation worsens for lower-income households in DC and in the surrounding suburbs--which will likely happen--you will see a noticeable uptick in the crime rates. Property thefts and street muggings will be occurring in the more traditionally safer neighborhoods in upper northwest and in the Georgetown/Glover Park. The increase in crime will drag DC housing prices even lower.
All-in-all...the debt deal could have been worse to the DC economy. I think we dodged some serious bullets in the short-term but I am nervous when the next round of government spending cuts gets through the super-duper debt reduction commission.
How do you figure that Congress's extension of the Bush tax cuts are Obama's tax cuts? Obama didn't propose and enact those, Bush did.
The fact that we're keeping those cuts in place at a time when the country is struggling to pay its bills is beyond nonsensical, but also probably a topic best addressed in another forum.
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