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Greater Washington is seeing some economic ‘momentum,’ but deeper problems remain

From The Washington Business Journal:

Greater Washington is poised to bounce back from a weak 2016 by posting above-average regional growth this year and the next, according to a new report released Wednesday by the Stephen S. Fuller Institute at George Mason University during its new annual economic forum.

While the region saw just 1.1 percent growth in its gross regional product (GRP) in 2016, it is on track to double that in 2017 (about 2.2 percent), which would mean the region would outperform the national economy for the first time since 2010, according to the report. The growth also represents a steady increase since the 0.8 percent GRP loss in 2013.

The region would then see about 2.8 percent growth in 2018, in line with the projected national average, according to the report. But for economist Stephen Fuller, who has been pointing out some disturbing underlying trends in the region and pushing for regional solutions to what he sees as missed economic growth, the estimates come with some asterisks.

“What we see is that the Washington region economy appears to have regained some footing,” Fuller said. “It’s not comparable to what it was used to before the recession, but it’s a recovery from the downturn it took in 2013 and the meager growth it registered in 2014.”

The region is also on track to create more jobs over the next five years than previously thought, about 209,500 compared with earlier forecasts of 172,200 jobs. But those jobs don’t pay as much as they used to, a topic I explored in a related piece published Wednesday.

But the region is not seeing its full growth potential, Fuller said. The D.C. area is lagging behind large metropolitan areas in the number and quality of jobs added and is losing people to other cities. That all contributes to lower growth — and the economic equivalent of a missed opportunity.

“We should celebrate that the patient didn’t die,” Fuller said in regards to the growth the economy is seeing. “We are not used to being average. We were used to being in first place and outperforming everybody else.”

There are other potential dangers to worry about, according to Fuller. The region’s economy has been slow to diversify away from the federal government and toward advanced industries in which Greater Washington has a competitive advantage — which has meant slower growth in high-quality jobs.

The region is also still highly dependent on federal government spending, which means that large cuts in contract spending by agencies could lead to slowdowns in economic growth, such as what was seen in sequestration, according to Fuller.

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Copyright Washington Business Journal, reprinted with permission