David Miller has piped up again over on his blog, and it’s pretty interesting:
In Washington, The Recession Is Over
DC is booming because this year the federal government is pumping 9% more money into the local economy than it did last year. Welcome to wartime. I suspect most of the money is in the form of consulting contracts for homeland defense and DOD (what exactly does the Department of Defense defend now that we have a separate homeland defense agency?). As a result of this money Washington-area housing prices are up by 20% in a year, making all the middle-aged types euphoric and rich; a townhouse in Arlington worth $200,000 at the beginning of the Bush administration is worth $350-$400,000 now. Traffic is reaching LA levels but the place is, considering how the rest of the country is doing, almost indecently prosperous.
The strange part is that no one in DC seems to know that the national economy is stagnant; they assume the recession is ending because it is over in DC. My professional economist friends assumed, until we checked the bls.gov website, that the U.S. and DC unemployment rates were roughly the same. The local paper, the Washington Post, has almost no coverage on the national economy that would change their minds; all the coverage is about local real estate, housing prices, and new defense contracts.
And that leads to a curious disconnect between the capitol and the hinterland. Everyone in DC assumes Bush will win the 2004 election in a walk because the economy is better.
Create a new category:
Our nation’s capitol is undergoing a boom while the rest of the economy languishes. That fills the city with a strangely distorted view of the nation’s economy, the nation’s mood, and the prospects for the next election (more).
I lived in the Washington area for 19 years and still visit often. Today I’m just back from a week there. Almost everyone in Washington, including two professional economists I know, thinks the economy is “picking up”, and that the unemployment rate in DC is roughly at the national average. That was true 18 months ago, but is emphatically not true now.
Today the Washington-area unemployment rate is 3.4 %, roughly full employment, while the rest of the country struggles by with a 6% unemployment rate which stubbornly refuses to fall. Of the more than 300 metropolitan areas in the U.S., DC has the 32nd lowest unemployment rate, and all the places doing better are small towns. The next best showing by a big city is Atlanta, which has an unemployment rate almost 50% higher than DC.
DC is booming because this year the federal government is pumping 9% more money into the local economy than it did last year. Welcome to wartime. I suspect most of the money is in the form of consulting contracts for homeland defense and DOD (what exactly does the Department of Defense defend now that we have a separate homeland defense agency?). As a result of this money Washington-area housing prices are up by 20% in a year, making all the middle-aged types euphoric and rich; a townhouse in Arlington worth $200,000 at the beginning of the Bush administration is worth $350-$400,000 now. Traffic is reaching LA levels but the place is, considering how the rest of the country is doing,almost indecently prosperous.
The strange part is that no one in DC seems to know that the national economy is stagnant; they assume the recession is ending because it is over in DC. My professional economist friends assumed, until we checked the bls.gov website, that the U.S. and DC unemployment rates were roughly the same. The local paper, the Washington Post, has almost no coverage on the national economy that would change their minds; all the coverage is about local real estate, housing prices, and new defense contracts.
And that leads to a curious disconnect between the capitol and the hinterland. Everyone in DC assumes Bush will win the 2004 election in a walk because the economy is better. The local Democrats are in a panic. Maybe that’s why Dean is doing so well; he lives in a place with no jobs and a recession.
Last week the government unveiled the national “do not call”list; just go to donotcall.gov, sign up, and most of those annoying dinner-time calls trying to sell you a condo will stop. More than 500,000 people tried to sign up the first day. Everyone in DC was shocked; this was more than four times what they had expected. The government hurriedly quadrupled the number of computers handling the requests. Why were they so surprised? Well, I have a hint for you. My friends in the rich inner suburbs of Washington don’t seem to get these calls. The cold-callers aren’t fools; annoy the rest of the country at dinner, but not the people who make the decisions. In Washington cold-calls at dinner simply weren’t much of a problem.
Come election time the press and the permanent, prosperous governing class in Washington might just be in for a big surprise if the economy doesn’t pick up in places where the voters live and begin to match the rosy world where the opinion-makers live.