I'm starting to worry, a lot, about the local economy of the Washington, DC region

Image: mapping the Regional Capacity Index (UC Berkeley).

The health of the DC economy over the past few years has been pretty good relatively speaking. Currently, the real estate market within DC proper is one of the strongest in the United States, and while housing prices have dropped down from the stratospheric heights of a few years ago, relatively speaking the city is reasonably healthy economically, rising in population after decades of decline, and adding a significant number of new housing units.

At one level DC specifically remains somewhat steady economically, a function of (1) the relatively steady employment generation of the federal government; (2) the desire of trade associations, key contractors, lobbyists, and law firms dealing with the federal government to locate close by; (3) the building height limit in DC, which constrains supply and keeps commercial property values and rents high; and (4) an improving quality of place within DC, complemented by attractive neighborhoods, especially those with historic building stock, which attracts new residents. (Generally, the region does well too, with Northern Virginia having an edge from defense spending, but there are problems, and the real estate downturn and the rise in foreclosures has debilitated some counties such as Prince George's.)

But this is a relatively recent phenomenon. During the long period of declining quality of local government, the city stagnated, even if the central business district has performed relatively well for commercial office space. This was definitely the case from the late 1980s until Anthony Williams became Mayor in 1999, when the investment climate and perceptions of the city changed significantly, compared to the long period where Marion Barry led and/or shaped the city's politics, management, and operations.

The other day papers reported that for the first time in awhile, job generation in the region declined and unemployment rates are up ("Washington's employment bubble bursting" from the Examiner).

With the dominant theme in national government being debt reduction, including shrinking the military budget, and major cutbacks across all types of government agencies, it may well be that the steady employment engine of the federal government will no longer be such a reliable characteristic of the regional economy, especially in Northern Virginia, which is heavily oriented to defense (not unlike Gov. Dukakis' "Massachusetts Miracle") and in DC and Montgomery County, Maryland, where there are many federal agencies.

This probably means that the center city's value as a residential location will continue to improve, comparatively speaking, because of the quality of life factors, and younger household preferences for urban living, but the real estate development market may slow down again, as there will be less demand for office space, even as the demand for multiunit housing remains strong as the ownership segment of the housing market continues to decline.

I've been meaning to write about a bunch of interesting work on resilience in local economies, including the Resilience Capacity Index ("Measuring ‘resilience’ of U.S. metro areas" from the University of Buffalo Reporter), the Building Resilient Regions initiative of the Institute of Governmental Studies at the University of California Berkeley, and initiatives at the Center for Local Economy Studies in the UK work on "Place Resilience" and the UK's Urban Forum Guide to Community Resilience.

The Washington region is ranked 10th on the RCI according to data compiled in 2010, but with the recent debacle over the national debt ceiling, I think that this ranking position will change, relatively, at least, and there will be significant differences between jurisdictions intra-regionally.

From "Ranking the ‘resilience’ of hundreds of U.S. cities" on Smart Planet:

... we measured resilience as a capacity to do well, a capacity to cope with an unknown future challenge. It was a generalized index of the kind of factors that have been hypothesized to matter for responding well to a crisis. The resilience capacity index identifies and uses 12 factors that are thought of as the kinds of factors that would make you more resilient in the face of a crisis. ...We made three categories and there are four factors in each category:

Regional Economic Capacity

Diversification - The familiar notion that if you’re going to be resilient, you don’t want to put all your eggs in one basket in terms of the economy. It gives preference to the economy that is diversified, rather than specialized.

Business Environment - This is a general index that incorporates factors such as small business churn, venture capital and characteristics that have to do with broadband access. It’s a general index for innovation.

Regional Affordability - This is a measure that relates housing costs to median income, so you get a sense of how affordable this place is. More affordable places tend to be more resilient because you don’t have so many people stretched to the limit.

Income Equality - This is a measure of the degree to which the distribution of incomes in your region isn’t skewed.

Socio-demographic Capacity

Educational Attainment - The degree to which you have people that have an education tends to mean more opportunities available to them.

Without a Disability - The percentage of the population that does not have a disability. A disability can be, especially for an acute crisis, particularly challenging.

Being out of Poverty - People with more means, more resources at hand, will have more opportunity to cope in a challenge.

Proportion of Population that has Health Insurance - This is a generalized measure. In the moment of a crisis, if you have health insurance you have more availability of care. Also, it’s a general measure of how stable people are in that region. A large proportion of the population without health insurance is a vulnerability for that region.

Community Connectivity

Civic Infrastructure - A measure of the civic organizations in the community. It’s a proxy for civic engagement for the people in that area.

Home Ownership - This is a basic measure for connectivity. As a general rule, home ownership signals a real commitment to place.

Voter Participation - A standard measure that’s often used to signal activity and interest.

Metropolitan Stability - This is the measure of the stability in one residence in a place for a number of years. Places that have a lot of mobility, or people moving around, tend to be less resilient. You’re not as familiar with the place, so in a shock you might not know the escape route. Also, metropolitan stability lets you know who your neighbors are.

Note that I do think that measuring this data at the metropolitan scale is too gross-grained, and measurements at the jurisdictional level could be more useful, at least in terms of regional planning.