Center for Regional Analysis Predicts Robust Economic Growth for Washington Area
Posted: January 7, 2005 at 1:00 am, Last Updated: November 30, -0001 at 12:00 am
By Amy Biderman
The Washington, D.C., economy expanded faster than the nation as a whole in 2004 and will continue to experience strong growth in 2005, according to researchers at George Mason’s Center for Regional Analysis in the School of Public Policy. The 13th Annual Forecast for the Greater Washington Area was released yesterday at a conference sponsored by Cardinal Bank at the Ritz Carlton Hotel in Tysons Corner. More than 250 executives from business, real estate, and government attended the event.
“The Washington area had the best economy of any area of the country in the past year,” said Stephen Fuller, Dwight C. Schar Faculty Chair and director of the Center for Regional Analysis. “It outperformed all major metropolitan area economies by a wide margin in 2004 and was not negatively impacted by rising energy costs or other disruptions, as was the national economy. This economy has legs.”
Noting that the region has outperformed the national economy for the last six years, Fuller said that the Washington area was the national leader in job growth in 2004: an estimated 70,500 new jobs accounted for 4 percent of the nation’s new jobs. Moreover, the benefits of federal procurement spending in the area continue to favor the Northern Virginia economy: job growth was more than double the number of jobs added in suburban Maryland and outpaced job growth in the District of Columbia by a factor of 6.
Looking at this year through 2007, the region is expected to outperform the nation and continue to generate new jobs at rates higher than the national average. A record 83,000 new jobs are expected in 2005, with slight moderations in 2006 and 2007. “By mid-2005,” Fuller said, “the economy may have begun to show the early signs of slowing with gross regional product, followed by jobs showing a long-term trend of slower annual growth going forward to the end of the decade.”
While acknowledging the robust economy of the Washington region, Roger Stough, Northern Virginia Chair in Local Government and director of the Mason Enterprise Center, cautioned that the region has “an inherent dependence on the federal sector,” which accounts for more than 50 percent of the regional economy. “No other place comes close to that level of dependency, and this sets the stage for vulnerability,” he said. “Viewed from a structural perspective, the Washington regional economy looks more like a quasi-isolated mining community or a port city like Valparaiso, Chile, before the Panama Canal was built.”
Noting that federal government procurement is not expected to grow as quickly as it has in the recent past, Stough recommended “more balance and integration” in the regional economy. “Diversity is key to surviving shocks in the economy,” he said.
How can the region diversify itself and broaden the economic structure in the long term? Most important, Stough said, is the need to develop a sense of urgency. “Without a perceived need and the will to address the dependency issue, [the region] will move along optimistically until a major break occurs and decline in federal spending and contracting in the region set in.”