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Transcript

Matthew Wells: My name is Matt Wells and I'm a senior economic writer at the Richmond Fed. Today, I'll be filling in for our usual host, Tim Sablik, who is taking some well-deserved time off.

My guests today are Andy Bauer and Amy Liu. Andy is the regional executive for the Richmond Fed's Baltimore branch, overseeing external engagement for the Bank in Maryland, the Washington, D.C., metro area and West Virginia. Amy is a non-resident senior fellow at Brookings Metro, a program within the Brookings Institution, and an expert on cities and metropolitan areas. Andy and Amy, thanks for joining me.

Andy Bauer: Hey, Matt, thanks for having us.

Amy Liu: Thanks for having me on as a guest.

Wells: Last year, the White House led efforts to shrink the size of the federal government by cutting federal jobs, contracts, and grants. A significant share of federal jobs and federal contractors are located in Washington, D.C., and the surrounding metro areas in Maryland and Northern Virginia, often referred to collectively by their initials, DMV.

Because this region is part of the Richmond Fed's district, Andy and other researchers at the Bank have been following these developments in trying to understand how this downsizing might impact the DMV's economy. Amy, you and your colleagues at Brookings have also been tracking these changes through the creation of the DMV Monitor, and you recently presented some of your findings to our researchers.

Let's start the conversation there. What sort of data have you collected to gauge the size and impact of federal government changes?

Liu: First, Matt, I just want to say it's a real pleasure to be here with you and Andy. I know the Fed Reserve research team has done great work on this topic. I really appreciate that, and I'm actually looking forward to this conversation with Andy to learn from him.

We launched the DMV Monitor last fall because there was high demand from local and regional leaders, including the D.C. mayor's office, for a trusted unified picture of the scale of the impact of federal downsizing — what it was doing to the people, the businesses, and jurisdictions across the Washington area. They were getting a lot of fragmented information. They were getting conflicting information. These leaders wanted to be on the same page about the nature and scale of the challenges so that they could come together and craft a response.

The DMV Monitor was created to examine the impact of federal actions on everything from jobs and the overall economy, on workers, and then the follow-on impacts on housing, innovation, tourism and family well-being. Because it relies on timely information, the data that we use for the Monitor doesn't just use public sector data sources like the BLS or WARN layoff notices. It does also rely on private sector data sets like Lightcast, Crunchbase, CoStar, and Realtor.com.

The most recent DMV Monitor examines trends through the third quarter of 2025. That means the end of last August or September, and that means that the trends cover the impact of the first six to nine months of federal layoffs and of federal spending cuts, and even the beginning of the National Guard presence which came in August in the District [of Columbia].

What that means is the data that I'm going to share today does not cover what happened to workers after they received their last paycheck and set of benefits on September 30. That's when the "fork-in-the-road" notices were due. It does not cover the impact of the six-week government shutdown [and] any additional layoffs since then. This is the reason why we created the Monitor — so we can continue to monitor the state of the economy here over time.

Wells: There have been a lot of different estimates about the size of federal job losses. Some workers have been laid off and others have accepted that fork-in-the-road buyout offered to leave voluntarily. Amy, can you put a number on federal job losses through the period that you studied?

Liu: Sure. The Trump administration has claimed that they have cut 300,000 federal jobs nationwide. I'll just say that there's no doubt that a disproportionate share of those cuts were felt by workers in the nation's capital.

The latest BLS data shows that from November 2024 to November 2025, the DMV region lost 13.8 percent of their federal jobs. That translated to 41,000 lost federal positions. This is a sharper decline than what happened nationally, I believe. There's another report that says that the federal job losses now have accrued to 72,000 jobs in the region. That's equivalent to if Meta laid off all of its workers. So, I think where we stand today is that the region has 327,000 workers, making it the lowest number of federal jobs in the region in 25 years.

The one thing I do want to add, Matt, is that federal downsizing doesn't just impact federal workers. In fact, the cuts in federal jobs and spending sparked widespread layoffs in the rest of the economy. That means non-government entities — the private sector, the nonprofit sector, quasi-government employers — also laid off workers as a result of these federal actions. Those non-government layoffs jumped by 154 percent since last September to September 2025. That's huge compared to what happened nationally at 38 percent. What that means is when the federal government cuts grants and they cut research contracts and they cut service contracts, it exacts a downstream toll on the staff of think tanks, of universities, of consulting firms and defense contractors, and nonprofits that are located in the region.

Wells: That's interesting. Were you able to look at any differences within the DMV region between states like Virginia and Maryland and the District [of Columbia] itself?

Liu: When we first issued the DMV Monitor, the Maryland suburbs — especially Montgomery County — bore the brunt of federal job losses and layoffs in the region. Through June of last summer, that county was ground zero for the cuts to USAID and federal research because a lot of USAID nonprofits and the NIH were located in Montgomery County.

When we updated the Monitor through the third quarter of last year, the impacts of federal downsizing had spread. By September, Prince William County, which is in Virginia, experienced the highest jump in layoffs, driven by layoffs in defense contracts and in small businesses. I found that the Lutheran Social Services Center laid off more than 50 employees last fall. That's likely due to the cuts in social service funding that we heard about in the Big Beautiful Bill. And we have heard that the social safety net provided by nonprofits has been really undercut. I think that's a real reminder that these federal cuts impact not just our government sector, but a lot of people who do work in this region.

I want to close by saying there were four jurisdictions in the region that ultimately experienced net job loss as a result of federal restructuring: Montgomery County, Arlington County in Virginia, the District of Columbia, and the city of Alexandria.

Wells: Andy, you've also been tracking economic conditions in the DMV through data and conversations with business and community leaders. What have you learned about the DMV job market through the past year?

Bauer: Amy did a really good job talking about the impact to federal workers. We've been loosely calling it federal adjacent — those that have been impacted through changes in funding, loss of contracts, and the like. You saw tremendous dislocations due to those changes in policy.

Outside of the federal and federal adjacent, what we've been hearing from most contacts is that we're in a "low fire, low hire" market. When we speak with firms, there are very few that are actively hiring. The firms that I've talked to that are hiring are just a few sectors like health and education, or they are seeing strong job growth due to data center activity or infrastructure work.

Many firms report that their applicant pool is much deeper and, in some instances, with candidates with strong backgrounds. Some of those could likely be dislocated federal workers. Some of those firms that are seeing those higher quality candidate pools are being optimistic and are hiring these candidates, but these are really the exceptions. More times than not, what we're hearing is that companies are keeping their headcount flat or are reducing through attrition.

There are a few firms outside of those that Amy talked about that are impacted by changes from federal government that are actively firing. That makes it difficult for those displaced workers that are looking for a job to find that job, as well as for new graduates who are looking for that first job.

One of the things that we've been looking at is the change in the unemployment rate. The unemployment rate in Maryland and the District of Columbia has increased by more than a full percentage point in 2025 through November, and increased by just a little over half a point in Virginia. At the same time, you're seeing people leave the labor force — the labor force participation rate decreased last year in all three jurisdictions. In Virginia, it decreased by 1.5 percentage points. So overall, what you see in the data is a labor market that's very much softening, and you hear that as well as in their conversations with businesses.

Liu: One of the indicators we track in the DMV Monitor is, what's the job postings like? Are people hiring? We're trying to help a lot of displaced workers stay in the region because there's such great talent in this region. Do we have employers that are hiring?

What the numbers show is that between September 2024 and September 2025, job postings definitely have gone up in the DMV region. It's up by 6.4 percent. So, employers are hiring, but it's dramatically smaller than what is happening across the country. The average job postings across the country is up 16 percent. It's only up 6 percent here.

Wells: Let's keep going with this story of economic spillovers. You've talked both about the job market spillovers and the softening of the job market, generally, beyond just government workers. I'm curious if you've seen any other economic spillovers in areas such as housing. Andy, let's start with you.

Bauer: In terms of spillovers, one of the things that I've been focused on was how the federal cuts in both employment and spending can impact the private sector. During the 2013 sequester, for example, when there were across-the-board cuts to federal spending, you saw a sizeable impact on private job growth. In Maryland, for example, private employment growth slowed by a full percentage point to just half a percent. In Virginia, the impact was even greater — private job growth stalled completely.

Of course, the cuts in 2025 were not across the board — they were much deeper in certain areas. But we are seeing a slowing in terms of private job growth. In Maryland and Virginia, private employment was flat last year — this is the data through November. The District of Columbus was down 1.6 percent

In addition, we've heard it from a number of service providers in the District, talking to restaurants, fitness centers, retail. Many reported that demand was less steady and off during the spring and fall, during DOGE and during the government shutdown. I could also mention that auto dealers are seeing some of the same softness in the beginning of the year in particular, as well as at the end of the year.

Overall, [federal government cuts] just created a lot of uncertainty in the region, which has made it difficult for firms to lean forward when it comes to hiring, investing — any type of activity that would lead towards greater growth.

You mentioned housing. We are seeing, in some cases, that the housing market is softening as well. I know that Amy, in the Monitor, they're looking at this data. We've been looking at the data as well. One thing that really stands out to me is that the number of active listings is up 30 percent over the past year. You're seeing that in terms of comparing the District [of Columbia] versus what you're seeing nationally. Home prices are not increasing as much. Home prices are flat. Homes stay on the market a little bit longer. Overall, you're seeing a housing market where things are slower and more people are putting their homes on the market.

Liu: Let me just build on what Andy just said.

One of the biggest concerns that employers have here is loss of talent. A lot of people really like being in this region because it is a magnet for high caliber talent. It attracts talent from all over the world. It is a globally fluid and diverse talent pool. It's one of the reasons why Amazon located its headquarters here. The thing that's on people's minds now is, are talented families leaving as a result of the federal climate?

That's where the housing question comes in, Matt, that you asked about. We can't track whether people are coming or going, but we can track home sales and people putting their homes on the market as a proxy for relocation patterns. When you put a home on the market, it means that you're intending to move.

What the DMV Monitor shows is that the number of homes being put up for sale in the DMV region has jumped by 49 percent in September 2025 compared to one year earlier. That is nearly three times higher than the rate of home listings in other large metropolitan areas and in the nation as a whole.

There's no doubt we know that means that people could be moving to other parts of the region. They can be, because of their circumstances, moving from home ownership to rental. But it also could mean that they're leaving the region. And so, this is one of those questions that, over time, we're going to try to unpack a little bit more.

Bauer: If you look at who's been displaced, in many cases it's those who are highly skilled with unique skill sets or highly educated folks that are doing research in a specific area. And so, when you lose that particular opportunity in that location, you have to start looking at other locations. So, that is a key question of where people go.

Wells: How have you learned from each other in the process of tracking this topic?

Bauer: It was fantastic when — I think it was in June — there was a Leadership Greater Washington event and Amy presented the outline for the DMV Monitor. The timing was perfect because we internally were putting together our own set of material so that we could regularly update our Bank president and senior stakeholders about things that were going on in the region. And so, it was really nice to be able to look and see how they were thinking about the problem. They were looking at it more broadly, more holistically, than we would have thought about.

Liu: In putting together the DMV Monitor, including our initial essay, I turned to the Fed Reserve research quite a bit.

I thought the analysis that your team did on the concentration of federal employment by jurisdiction in this district was really illuminating. It made me realize how many outlying counties and rural counties were actually very dependent on federal jobs. So, when Charles County, Calvert County, Anne Arundel County or others have high shares of workers employed by the federal government, any sizeable job losses for those counties has a huge impact on the revenues for those jurisdictions. This is one of the reasons we will continue to figure out how to make sure we track what this does for jurisdictional revenue and, therefore, their ability to provide services.

The other thing is the DMV Monitor actually uses Fed Reserve data. One of our important indicators is household well-being, and it's very hard to find regular, routine data on that. So, we turned to the Fed Reserve credit constrained data that I think your colleagues in St. Louis put together. The data there is really sobering about the households across the country, but particularly for the DMV region. So, we're going to continue to learn from the Fed research team.