The Trump administration’s mass firing of federal workers has taken a significant toll on Washington, D.C.’s economy, largely offsetting benefits from the end of federal telework.
A new survey from the Restaurant Association Metropolitan Washington, released on March 18, illustrates the anxieties and poor conditions many restaurant owners are facing. Roughly 44% of fast-casual restaurants said they expect to close this year due to rising costs, a decline in traffic, and federal layoffs.
Their outlook on 2025 is bleak, with 51% expecting the poor conditions of 2024 to worsen in 2025.
Of those surveyed, 73% anticipated negative effects from the federal layoffs, and 82% anticipated negative effects from President Donald Trump’s planned tariffs.
The Washington Examiner spoke with several businesses in downtown Washington, and the workers gave a mixed reception to recent economic developments. However, all agreed that recent developments hurt their own businesses or others familiar to them.
Stan’s Restaurant and Cocktail Lounge is one restaurant feeling the brunt of the federal layoffs.
Thanh, a bartender, said her restaurant was overjoyed with the influx of customers brought in through Trump’s executive order ending telework. However, the honeymoon period was short-lived, with federal layoffs taking immediate effect.
“At first it was great, now all of a sudden, we’re back to being worried,” Thanh told the Washington Examiner. “It’s gotten bad.”
Her experience illustrates a wider economic problem of the federal layoffs. The immediate cutoff of customers has created a ripple effect, where the financial uncertainty brought on by the specter of layoffs causes possible customers to tighten their purse strings.
Thanh also cited a recent minimum wage increase law as having hurt the business.
One Joe and the Juice location is a rare example where the end of federal telework has outweighed the downsides of the federal layoffs.
The restaurant has benefited from its central location in McPherson Square. Joe, a shift manager, told the Washington Examiner that they’ve seen a major boost in sales the past few months, especially during tourist-heavy times such as Inauguration Day.
The restaurant has even outperformed its other locations in New York City.
Despite this, Joe said their good fortune isn’t being shared by everyone. He cited the Restaurant Association Metropolitan Washington survey, adding that he’s seen several stores experiencing hardship recently.
For some, such as Via Sophia, a fine-dining restaurant connected to the Hamilton Hotel, operations have largely remained the same. Jonathan, an assistant general manager at the restaurant, said there’s been no change from previous months.
“Not at all, we’ve had the same amount of customers and reservations,” he said, crediting their loyal regulars.
Like Joe, however, he acknowledged that Via Sophia’s experience is an outlier. He said fine dining establishments have been the worst hit by recent developments.
Despite the thriving business being connected to the Hamilton Hotel, the hotel side hasn’t had the same pleasant experience.
The end of telework led some in the hotel industry to hope that in-person conferences would make a major comeback, bringing business both because of conferences and by housing those needing a place to stay.
Kevin, director of the front office at Hamilton, waived away such hopes, saying the establishment has seen business plummet in recent months. He said there’s been “no influx” of recent customers as a result of telework ending.
The Department of Government Efficiency has had a major impact on the hotel through its cutting of government contracts. Kevin told the Washington Examiner that several major contracts with the government from January through May were canceled, costing a significant amount of business.
Kevin’s vision of the foreseeable future was also gloomy, saying Hamilton was “Not expecting much of a change right now” aside from a small influx due to the cherry blossoms.
The chilling effect of layoffs was illustrated by the Restaurant Association Metropolitan Washington survey, which also polled Washingtonians on their dining and spending habits. Nearly half of respondents said they were dining out less. Even those still going out were cutting down on their purchases, with 32% selecting cheaper restaurants, 31% ordering fewer dishes per visit, and 24% skipping alcoholic drinks.
The chilling effect was further illustrated by hard data from the Bank of America. While other East Coast cities such as New York, Boston, Philadelphia, and Baltimore reported an increase in card spending, Washington saw a spending dip. Discretionary card spending in February year-over-year declined 0.5%, while total card spending declined by 0.3%, Axios reported. Total card spending nationwide increased over the same period by 0.3%.
Bank of America Global Research analysts ruled: “DOGE cuts appear to be weighing on spending in D.C.”
The decline in spending comes in contrast to disproportionate population growth in the DMV area. The U.S. Census Bureau found a 1.4% increase in population between 2023 and 2024, compared to just about 1% nationally. There are now more people living in the area than before COVID-19 — 6,436,489 as of last year.
Despite these negative statistics, the DowntownDC Business Improvement District offered some optimism. Statistics provided to the Washington Examiner showed higher activity in the district compared to last year. Placer.ai cellphone locational data found 1.36 million unique visits to the BID during the week of March 3, compared to 1.34 million the previous year. The visitors are mostly a mix of workers, residents, and tourists.
Trump’s back-to-office order is also visible; BID reported its office utilization records breaking in three of the past four weeks. Year-over-year office utilization improvements ranged from 2.2% to 9% over the corresponding weeks in 2024.
The week of March 10-14 set a new record for office utilization of 51.9%, while the daily record was broken on March 11, at 62.9%.
The extent of unused offices in Washington was highlighted in a December report from Sen. Joni Ernst’s (R-IA) office. Three percent of the federal workforce teleworked daily before COVID-19, according to the report. By December, only 6% of workers reported in-person full-time, with a third entirely remote.
“Not a single headquarters of a major agency or department in the nation’s capital is even half full,” the report read. “Government buildings average an occupancy rate of 12%.”
The BID told the Washington Examiner the return to the office is expected to help retail sales, but the change is too recent to map out any changes.
TRUMP IS REMAKING, NOT BREAKING, DC
Housing demand has also increased, with multifamily rents up 3.2% year over year and condo resale prices up 2.5%.
Public spaces in Washington also have yet to be revitalized. A visit to Franklin Park, the district’s largest green space during lunchtime on Thursday, at a time with good weather, found it relatively sparsely populated.
