Signs of a DOGE Recession Are Flashing in D.C. as Trump Cuts Take Toll

Washington, D.C. — The capital city is on edge. As the Trump administration slashes federal jobs and spending, a “mild” but worrying DOGE recession in D.C. is gaining momentum — and the warning signs are mounting fast.

From rising jobless rates to falling consumer spending, the economic ripple effects are already being felt in neighborhoods, small businesses, and even in once-booming suburbs like Prince George’s and Fairfax Counties.

Unemployment on the Rise

Before the worst of the cuts even hit, D.C.’s unemployment rate was already surging. According to city figures, the number of unemployed residents jumped 12.2% in February 2025, compared to the same time last year.

Suburban communities are feeling the squeeze too. In Prince George’s County, a historic hub of Black middle-class success, unemployment rose from 2.2% in March 2023 to 3.5% in 2025. In Fairfax County, Virginia — a region driven by tech and defense — joblessness climbed to 3.2% in March, up from 2.2% in December.

Credit Downgrade Adds Pressure

Adding to D.C.’s woes, Moody’s Ratings downgraded the city’s outlook to “negative”, stripping away its prized AAA bond rating. This means borrowing money for public projects just got more expensive — at a time when the city’s budget is already under serious strain.

Locals Are Spending Less

Everyday residents are tightening their belts. According to Earnest Analytics data reviewed by The Washington Post, retail spending in April dropped 2%. Residents are skipping luxury purchases like gym memberships and eating out less. Businesses are starting to feel the drag.

Real Estate and Construction Take a Hit

The city’s once-hot housing market is cooling fast. Home listings are soaring, and new construction has slowed sharply. Residential building permits were down 33% in February, a clear sign that investor confidence is wavering.

Meanwhile, the D.C. Chief Financial Officer is projecting a 1.9% economic contraction in the next fiscal year — a far cry from the city’s boom years between 2010 and 2020, when population growth neared 15% and cranes filled the skyline.

Canceled Projects, Vanishing Jobs

Federal job cuts are only part of the problem. Trump has scrapped plans to build a new FBI headquarters in Maryland — a huge blow to local contractors and the real estate sector. At the same time, big-name employers are moving out. Both Six Flags America and the Washington Commanders are heading elsewhere, draining jobs and regional prestige.

Public Sentiment: Pessimism Rules

A recent poll by The Washington Post and George Mason University’s Schar School found that 79% of area residents believe Trump’s federal cuts will hurt the local economy. That anxiety is already showing up in spending habits and business decisions.

What’s Next?

All eyes are now on Mayor Muriel Bowser’s 2026 budget, which is expected to include deep service cuts — even as the city weighs spending big on a redevelopment project that includes a proposed new NFL stadium.

Whether the capital can weather this DOGE-driven downturn without deeper economic scars remains to be seen.

The DOGE recession in D.C. is more than just a forecast — it’s taking shape right now. With unemployment rising, spending falling, and confidence slipping, Washington may be entering a new era of economic uncertainty. How local leaders respond will determine how deep — and how long — the pain lasts.