Sequester Punctures Area Economy’s Government-Dependent Bubble

March 7, 2013

Recent American history is strewn with examples of regional economies that grew dangerously dependent on a single industry: Los Angeles with aerospace in the early 1990s, Northern California with tech at the turn of the millennium, Detroit with auto manufacturing and Las Vegas with home building in the mid-2000s. When shocks rattled those industries, those regions bled jobs, and their economies sputtered.

None of those areas relied as much on a single source for jobs and growth as the Washington region does on federal government spending today.

This is the economic vulnerability exposed by the budget cuts brought on by sequestration. A decade of expanding federal largess has shielded the metro area from the worst effects of the financial crisis and the slow recovery. It also left the region, in investment terms, with a precariously unbalanced portfolio — heavily concentrated in a single stock, which is now falling. 

 

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