Although the DC area tends to be more insulated from economic downturns than other areas, the downturn triggered by the coronavirus pandemic will hit the area in a similar way to the rest of the country.
This is one of the first points made in a recently-released report from the Stephen S. Fuller Institute offering some predictions of how the DC-area economy may fare through this downswing.
If the pandemic continues to disrupt business through May, consulting firm IHS Markit expects the economy to contract by 0.2% nationwide this year. In the DC area, the economy would increase by 0.1% this year. The national gross domestic product will drop by 5.4% during the second quarter of 2020, then gradually tick upward to return to growth in the first quarter of 2021. For the DC area, the gross regional product (GRP) will drop by 3.8% in the second quarter.
While people working from home will help keep productivity in the DC area from dropping as low as the rest of the country, less money will be spent as measures continue to be implemented to "flatten the curve", or stem the spread of the disease.
The surge in shopping for groceries and household items in February and March will have evened out within a year, and the biggest blow to the economy will be the 2-3 months where spending on entertainment, services, shopping, and eating out will slow to a crawl. This drop in revenue will account for 65-75% of the difference between the actual GRP and the GRP forecasted before the pandemic.
If the curve-flattening measures only continue through May, the report assumes that customers will return to the streets and pent-up demand will drive GRP in the third quarter, although this still won't compensate for lost revenue.
"When service businesses can resume normal operations, local consumers will return incrementally but business and leisure travel will likely stay below its pre-pandemic levels for another 1-2 quarters," the report explains.
For the hotel and tourism industries in particular, the downturn will result in a 12-month revenue loss of $630 million and $600 million, respectively. The overall hit to the service economy will affect 23% of the region's workforce, or 760,000 people, and even if just 15% of these individuals are laid off, the unemployment rate will more than double.
Moreover, if businesses remain closed into June and beyond, the economic effects will be much more exaggerated and prolonged as time goes on, as areawide loss of income suppresses consumerism.
This article originally published at https://dc.urbanturf.com/articles/blog/with-coronavirus-expect-dc-areas-uninsulated-economy-to-have-uneven-recover/16620.
Most Popular... This Week • Last 30 Days • Ever
This week’s Best New Listings includes a custom condo in downtown DC, a one-story h... read »
Why condo fees are high in some buildings and low in others can be a difficult questi... read »
When sellers haven't quite lined up their next house before their settlement date com... read »
In this edition of First-Timer Primer, we look into the question of how to determine ... read »
The preferred mortgage product among most home buyers is the fixed-rate mortgage. How... read »
UrbanTurf has compiled virtual looks at large new developments around the DC region.... read »
Virginia's homebuyer assistance programs can seem complex. This edition of First-Time... read »
A recent transaction shows that the housing market isn't cooling off everywhere.... read »
Developer Akridge has released new images of their planned Burnham Place development ... read »
The new development will also have a nearly 20,000 square-foot public plaza.... read »
With this weekend's DC houseboat tour a day away, UrbanTurf thought it only fitting t... read »
President Obama travels to Denver this morning to sign the stimulus bill that has bee... read »
In this week's installment of Ask An Agent, a reader wonders if there is a rule for h... read »
As The Wharf prepares to begin construction, DC's houseboat community heads to its ne... read »
In this week's installment of Ask An Agent, a reader asks a fairly common question th... read »
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!
Intro guides for first-time home buyers
Awesome and unusual real estate from across the DC Metro