publications | Economy

Chart of the week: Economic activity in the District slowed in 2025

September 24, 2026
  • Daniel Burge
  • Yesim Sayin

This chart of the week is excerpted from the forthcoming 2026 State of Business Report: Meeting the Growth Challenge, prepared by the D.C. Policy Center for the DC Chamber of Commerce. The catalyst for the production of the report is the importance of annually measuring how the District’s macroeconomy and the business community are performing.

Economic performance is often assessed using headline statistics such as gross domestic product (GDP) and employment growth. While instructive, no single measure captures the health of a modern urban economy like the District of Columbia’s. The city’s economy is shaped by a large federal presence, a substantial nonprofit sector, extensive commuter flows, and one of the nation’s most prominent commercial real estate markets.

GDP measures the value of all final goods and services produced within the District during a given period. Because it encompasses output from private businesses, nonprofit organizations, and government agencies alike, it is the broadest available measure of economic production. Changes in real or inflation-adjusted GDP provide an important benchmark for assessing whether economic activity is expanding or contracting over time.

Real GDP growth for the District of Columbia, quarter-over-quarter, annualized, Q2 2010-Q1 2026

Recent GDP data indicate that the District’s economic growth slowed in 2025, although both the overall economy and the private sector showed signs of improvement in early 2026. In 2025, real GDP in the District rose by less than 0.5 percent, lagging national performance. More notable was the nearly 8.3 percent annualized decline in real GDP between the third and fourth quarters of 2025—one of the sharper quarterly declines outside the COVID-19 recession.1 Consistent with this slower growth, the D.C. Policy Center’s Quarterly Business Sentiments Survey found that surveyed businesses’ six-month expectations for the District’s economy deteriorated over the course of 2025.2 Continued growth will be essential to turn the signs of resilience in early 2026 into a broad-based recovery.

Several factors likely contributed to the weaker economic performance in 2025, including the federal government shutdown, reductions in the federal workforce that affected payroll employment beginning in October 2025, declines in federal procurement, and continued softness in office-based industries.3

Endnotes

  1. Leah Brooks, Ferdinando Monte, Stan Veuger, and Paul Carrillo, “2026 State of the Capital Region: The Capital Region and the Trump Shock,” George Washington University’s Center for Washington Area Studies, esp. the Introduction and Figure I.1.
  2. Daniel Burge, “Five insights from the second year of the D.C. Policy Center’s Quarterly Business Sentiments Survey,” D.C. Policy Center, March 25, 2026.
  3. Leah Brooks, Ferdinando Monte, Stan Veuger, and Paul Carrillo, “2026 State of the Capital Region: The Capital Region and the Trump Shock,” George Washington University’s Center for Washington Area Studies, all but esp. introduction.

Authors

Daniel Burge

Director of the Alice M. Rivlin Initiative for Economic Policy & Competitiveness
D.C. Policy Center

Daniel Burge is the Director of the Alice M. Rivlin Initiative for Economic Policy & Competitiveness. Before joining the team at the D.C. Policy Center in late October of 2023, Daniel worked at the Center for Washington Area Studies at George Washington University. He performed data analysis for a report on mortgage market trends in the Capital Region and co-authored a policy brief on property tax lien sales. Daniel has published work in The Washington Post and Greater Greater Washington. He received his BA from the University of Puget Sound, his PhD in American history from Boston University, and his MPP (Master of Public Policy) from George Washington University.

You can reach Daniel at daniel@dcpolicycenter.org.

Yesim Sayin

Executive Director
D.C. Policy Center

Yesim Sayin is the founding Executive Director of the D.C. Policy Center.

With over twenty years of public policy experience in the District of Columbia, Dr. Sayin is recognized by policymakers, advocates and the media as a source of reliable, balanced analyses on the District’s economy and demography.  Yesim’s research interests include economic and fiscal policy, urban economic development, housing, and education. She is especially focused on how COVID-19 pandemic is changing regional and interregional economic interdependencies and what this means for urban policy. Her work is frequently covered in the media, including the Washington Post, the Washington Business Journal, the New York Times, the Wall Street Journal, WAMU, and the Washington City Paper, among others.

Before joining the D.C. Policy Center, Dr. Sayin worked at the District of Columbia Office of the Chief Financial Officer leading the team that scored the fiscal impact of all legislation the District considered. She frequently testified on high profile legislation and worked closely with the executive and Council staff to ensure that policymakers fully understand the fiscal implications of their proposed legislation. Yesim also has worked in the private sector, and consulted with international organization on a large portfolio of public finance topics.

Yesim holds a Ph.D. in economics from George Mason University in Fairfax, Virginia, and a bachelor’s degree in Political Science and International Relations from Bogazici University, located in Istanbul, Turkey. 

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