The Longest Shutdown Ever Is Over. D.C.'s 'Bigger Problems' Are Still Here

The longest federal government shutdown in history ended Wednesday evening.

The short-term spending bill Congress passed means federal workers can return to work, receive back pay and, for many of them, avoid losing their jobs before the holidays. Thousands of layoffs initiated over the past month and a half were rescinded as part of the deal, while future workforce reductions have been paused through the end of January.

For the rest of the population, it means federal food assistance benefits will resume, flights will shift back to normal scheduling, and government services will open back up.

In the D.C. region, where economic success is closely tied to the federal government, the end to the 43-day shutdown comes with relief. Public transit and federal corridors will start filling up again, the region’s more than 356,000 federal workers will be compensated retroactively, and those worried about their jobs have a few more months of security.

The Trump administration had threatened to withhold back pay and use the government shutdown to propel its workforce reductions. Agencies issued layoff notices to 4,200 employees in mid-October, most of which were on hold as a result of a court order.

“Nobody wants to be furloughed, but I think this time, the threat seemed more existential for many people,” D.C. Policy Center Executive Director Yesim Sayin said.

But for the region’s economy, the government closure was just one of a slew of federally fueled blows since President Donald Trump took office in January — from large-scale cuts to the federal workforce and contractor budgets to the deployment of National Guard troops on the streets of the city. 

“The importance of federal government closure has declined in D.C. because we kind of have bigger problems right now,” Sayin said.

The newly passed budget is also a short-term fix. It funds most government operations through the end of January, meaning lawmakers will still have to contend with the budget issue and the question of expiring Affordable Care Act subsidies in the coming months. 

“This isn't so much an end to the shutdown as it is continuing uncertainty, because we'll have to deal with all of this again at the end of January,” said Brookings Institution fellow Tracy Hadden Loh, a regional expert who sits on the board of the Washington Metropolitan Area Transit Authority. 

Sayin said the anxiety in the city won’t “diminish to zero,” given the January deadline. 

“There is a sigh of relief, for sure, among many, especially those who are vulnerable, depend on the federal government — employees, contractors and whatnot,” she said.

Even as more uncertainty and pain await, the last month and a half did have direct impacts on the region's economy, researchers and a prominent hotel operator told Bisnow. 

Loh is still crunching the numbers on the shutdown impact but said Wednesday that from her preliminary findings, spending and visitation to the city were both down during the period. 

The city's Smithsonian Museums and the National Zoo were closed, beginning two weeks into the shutdown, as were tours of landmarks like the Capitol and the Library of Congress.

October is typically a peak month for tourism to the city, and the shutdown aligned exactly with that busy season.

“People think D.C., it's all about cherry blossoms,” Loh said. “October [revenue per available room] is typically the same as April RevPAR. That's how important October is to the hospitality industry in D.C.”

Across five hotels in D.C. proper that Donohoe Hospitality operates, RevPAR was down 16.2% in October compared to the previous year, President Thomas Penny told Bisnow. In the greater region, 11 hotels Donohoe operates were down an average of 15.6% from last year. 

Though the year-over-year dip was stark, it is in line with September and August RevPAR declines, which Penny attributes to the National Guard deployment and the negative press surrounding the city.

But he worries that October’s decline had an outsized effect, as it is one of the months where workers expect to take home higher wages.

“My concern is based on what we've seen over the last three months, they have not been able to make a significant amount of money, and we're heading into a slower time of the year where they just didn't get the benefit of full income,” he added.

A spokesperson for tourism agency Destination D.C. said in an email that it is notable that this shutdown occurred in the peak October hospitality period, rather than in the slower months of December and January, like the previous record shutdown in 2018 and 2019. 

But the city's hospitality industry did benefit from private sector events, the spokesperson said, like Nvidia’s two-day conference at the end of the month that brought in 5,000 attendees. There was also increased demand for private museums like the National Museum of Women in the Arts and the International Spy Museum, the organization found. 

Metro ridership — and thus street-level activity in federal corridors — was another casualty of the government closure.

Weekday ridership at 78 of the 96 stations across the Metro system experienced declines in October compared with September, according to an analysis from The Washington Post.

At a dozen stations near federal office buildings, weekday passengers declined by a combined 19,000, the publication found. The L’Enfant Plaza stop alone saw an average of more than 3,400 fewer people getting off the train on weekdays during October. 

“Metro ridership had exceeded prepandemic levels right before the government closing, and now it's down again,” Sayin said. “And that’s like a brief spark in these neighborhoods which got extinguished by the federal action.”

Metro demand is expected to come back immediately, with federal workers being asked to return to offices starting Thursday under the standing Trump administration directive that agencies bring employees in five days a week.

The economic uncertainty and missed paychecks that the shutdown elicited also drove down revenue for local businesses. 

In a quarterly survey of 40,000 businesses that the D.C. Policy Center conducted in mid-October, 40% of the respondents said their revenue had declined, Sayin said. That’s compared to 36% in the third quarter, 32% in the second quarter and 25% in the first quarter.

Now that federal employees have somewhat more certainty around their finances and some comfort that their jobs are safe in the near term, consumer spending should see a boost, Sayin said.

“This restoring of back pay and all that can add to some economic activity, because I think the lack of clarity around what will happen to folks during and after the shutdown really impacted consumer behavior,” she said. 

The survey, taken two weeks into the shutdown, also showed a general pessimism about the city’s economy, Sayin said. More than 80% of the participants expected a decline in the city’s economic conditions over the next six years.

“We have never seen such low expectations about D.C.’s economy, about the regional economy or the national economy,” she said.

A question included in the D.C. Policy Center's second-quarter survey highlighted just how strong the connection is between the federal government and the local economy. 

In that survey, 69% of business participants said they depend on the federal government for success, Sayin said.

“Those ties run really deep,” she said. “And that's what we're seeing in the numbers, is a general pessimism, a negative impact on operations, especially revenue.”