Morning Poll: How Do You Feel About the Local Economy?

Columns

by ARLnow.com August 11, 2011 at 9:46 am 2,007 59 Comments

Even with the national economy in the dumps three years ago, the economy in the D.C. region — and especially in Arlington — remained strong, with low unemployment and a healthy real estate market.

Now, as the national economy teeters once again, there’s some question of whether the local economy can remain an island of vibrancy. With federal discretionary spending decreasing, and with the possibility of even steeper cuts down the road, Uncle Sam may not be able to provide the steady flow of cash that kept the local economy going during the last recessionary period.

The local economic indicators are a mixed bag. Unemployment in Arlington is still remarkably low, at 3.9 percent. Home sales are up in the most recent period, but home sale prices are down considerably in Arlington and in the D.C. metro area.

How do you feel about the direction the local economy is heading?

VaSQGuy

Eventually the rest of the countries woes are going to catch up to us. I think A-town is in for a rude awakening.
- ClizzleDizzle
  
  I hear you. When they start cutting the Federal Government after Thanksgiving, the housing market is going to tank.
  
  Kind of hoping for that actually; I’m ready to move out of my rental and start buying low.
  - NotSure
    
    The big money that will be cut from SS, Medicare and Medicaid disbursements probably doesn’t impact the Arlington economy all that much. Defense cuts could, but there again the really big money in manufacturing, bases and deployments aren’t as much part of our economy.
    
    Companies continue to consider this are for relocation of headquarters.
    
    http://www.bizjournals.com/washington/breaking_ground/2011/08/sears-narrows-hq-search-to-dc-and.html
    - ClizzleDizzle
      
      In a way I hope you are right. I do like it here and want to stay in NoVa.
    - CW
      
      Yes, I agree with your overall statement. BUT, here is the question, and I’ve yet to be able to find a good answer because I don’t work with legislative branch people. Can anyone provide a reference to WHAT is actually being cut? As I understand it there are 1) set-in-stone cuts, 2) cuts that need to be made by the committee of 12, and 3) cuts triggered if #2 doesn’t happen. I understand that the $1.4 trillion in #2 is anyone’s guess, but does anyone have a reference to the text to what is in #1 and #3?
      
      Also, keep in mind, everyone keeps saying “Oh, it’s just SS, Medicare, Medicaid, and defense”. Right, that is, as NotSure says, the “big” money, meaning hundreds of billions. But the rest of the cuts are still going to be “little” money, like a billion here and there. And that is still more than enough to sink the smaller programs which, collectively, employ a helluva lot of arlington residents.
      - Arlwhenever
        
        I’ve heard employment reductions from DOD folks, like 5,000 here, 16,000 and 9,000 elsewhere, not all in Arlington of course.
        
        The big deal for Arlington is when the budget cutters get out the knives for the defense contractors and the Beltway Bandits. It’s inevitable, the only question is how fast.
        
        Down the road someone will notice that predominantly white collar Federal workforce hasn’t been materially reduced during the internet era, while that has happened almost everywhere else.
        
        It will take time for all to occur, but is inevitable given that our country is borrowing 40 percent of what it spends — it is a financial horror.
      - CW
        
        Right, but does the plan that passed have anywhere, in writing, with dollars, a list of from where the cuts are coming (aside from the committee cuts, of course)? I would think a lot of people would want to know that, but I’ve not been able to find it. Also keep in mind that I am no expert on legislation, and by that I mean I am clueless as to its workings (something that I may have in common with those who craft it).
      - Arlwhenever
        
        There is essentially no plan yet. Plans will start being formed late this year and into next (unless the US wants another debt downgrade) and will be flying around like crazy come 2013 — my prediction.
      - Josh S
        
        Here is the full text of the bill.
        http://money.cnn.com/news/storysupplement/debt_ceiling_bill/?iid=EL
        It appears that the bill does not specify actual cuts by agency, for example, rather it just indicates what the spending level will be within the defense area and the discretionary area, indicating that overall spending will “decrease” (not grow as fast) by amounts that equal $917 billlion over ten years, about $21 billion in 2012. The cuts are shared roughly equally between defense and discretionary spending.
        
        There are no cuts (yet) to the entitlement programs. This is why the deal still doesn’t really address the problem as the entitlement spending is vastly more important than any one discretionary spending agency. You can cut EPA and NASA all you want but you’re still gonna have massive deficits and debt at the end of the day.
      - CW
        
        Ok, thanks guys. So basically, we know nothing right now. A lot of the future of the residents of Arlington is going to hinge on agency-specific funding levels. If it really is just a slowing of the rate of growth, then, well, I guess maybe things will just plateau off.
        
        That said, I’d imagine there’s a lot of political deal-making left to be done, and then there’s the committee. Who knows where the cards will fall when it’s all over.
      - Bender
        
        What is being “cut”?
        
        Let’s say that you go to a store and see a product being sold for $10. In the following week, the store raises the price of the product to $20, but you see that they are offering it “on sale” at 25 percent off.
        
        How much have they cut from the price? How much will you save if you buy it now? Or should the store be prosecuted for false advertising and deceptive trade practices because they are trying to sucker you into believing that $15 is a cut from $10?
      - Bender
        
        Let’s say that I have a personal monthly budget where I spend $1500 per month. Problem is that my income is only $1000 per month — a $500 per month deficit. So, I decide that I need to cut my budget to avoid catastrophic accumulated debt.
        
        My plan? I decide I am going to spend only $1200 per month . . . beginning five years from now.
        
        How much have I cut?
      - Josh S
        
        Well, again, the family budget isn’t a good analogy to the federal budget. Your spending doesnt’ stimulate the national economy. It doesn’t satisfy the needs of the poor or hungry nationwide. It doesn’t pay for roads to be built. It doesn’t pay for national defense. There are good reasons why the government would spend more than they take in via taxes in any given year.
        
        I’m not saying that there aren’t consequences to doing it long-term. But still, when the Tea Party types try to persuade Hank and Martha sitting around their kitchen table in Missouri that the federal government should be held to the same standards as they hold themselves, they are using a dangerous and misleading analogy.
      - normal
        
        Bender, aside from Josh’s excellent point, yes, you’re cutting spending, by $300. If you still need to borrow in order to avoid losing your house until you can bet back on your feet by increasing your income, it’s worth doing that to preserve your credit rating and keep from losing the investment in your house while home prices are down.
        
        But again, as Josh said, it’s a bad analogy.
        
        It is normal and expected for the government to grow as the nation’s population and economy grow. So even a smaller increase in spending is a “cut” sometimes. For instance, if you cut benefits to retirees, you could still end up spending more in SS in total because the total number of retirees went up.
      - SomeGuy
        
        Bender’s analogy isn’t perfect, but it is illustrative. I wouldn’t argue that the federal government occasionally hits a rough patch and should run a sensible deficit to get it over the hump. The problem is as Bender describes it, that there was never an end in sight to the “hard times” deficits, even in the good times. And instead of socking away a rainy day fund (i.e. saving a surplus instead of seeking ways to spend it), the federal government went and maxed out additional credit cards.
        
        But the biggest problem in our federal budget is the Ponzi scheme known as Social Security, which everyone seems afraid to raise the age on.
      - Josh S
        
        Actually, under President Clinton, there were several years of surpluses and the overall debt did begin to shrink. Hard to believe that was only eleven years ago.
        
        There was then some fairly significant revenue reductions in the form of tax cuts (family budget analogy – a voluntary pay cut) and then some fairly significant increases in spending for two wars and the “war on terror” in general (family budget analogy – IDK, a decision to spend a lot of money on fortifying your house?) and finally some more fairly significant increases in spending to bail out the financial system (family budget analogy – really none).
        
        So while the stress on the budget from growing entitlement spending has been with us and predictable for some time now, these particular factors of voluntarily decreasing revenue while at the same time voluntarily massively increasing spending have made the problem very acute in a very short period.
        
        Going back to the kitchen table, wouldn’t you think that in this situation Martha might turn to Hank and suggest that he ask to go back to his previous salary, as a way to deal with the mess?
      - Arlwhenever
        
        Josh’s plan (aka Obamanomics) is to print money to inflate away the debt, which drives up costs of commodities like food and energy, making it difficult for the disadvantaged to get by, which begets more spending to support people, which begets more debt monetization.
        
        Deficit spending becomes an endless overleveraged spiral that will end involuntarily with consequences like those that ran through real estate markets in 2008, only more dramatic.
        
        And guess what? The first baby boomers turning 65 this year will be pulling out their multi-decade contributions to Social Security and Medicare with interest, even though those contributions were used for other purposes so the trust funds had never actually earned the interest that actuarial funding calculations assumed. The demographic center of gravity is shifting to the point where the consequences are showing and growing. It is getting ugly and it will only get uglier.
      - Josh S
        
        Arlwhenever –
        
        I don’t recall ever articulating a plan.
        
        Your friend,
        
        Josh S
      - SomeGuy
        
        Josh, Hank and Martha shouldn’t be able to so easily just will themselves a raise.
        
        Continuing with your family analogy, I’d probably tell both Hank and Martha that they can keep the salaries they have, cancel that vacation they can’t afford, and trade out steak for Ramen Noodles 2 nights a week.
        
        And then I’d tell their adult child to get a job, ’cause Hank and Martha don’t have any more teet for him to suckle on.
      - Burger
        
        Josh,
        
        who controlled Congress when the budgets went into the surplus again?
      - ZoningVictim
        
        “Your spending doesnt’ stimulate the national economy. ” -Josh S.
        
        Really Josh? I believe you need to rethink that statement.
        
        Federal spending certainly doesn’t stimulate the economy. In case you haven’t noticed, the US budget has increased $800 billion dollars since 2008 and the economy has been pretty stagnant. That is true because the government doesn’t actually earn anything. Anything it wants to spend, it must first extract from the economy. Of course, that comes at a cost (compliance monitoring, penal system for non-compliance, accounting, paying a bunch of losers who couldn’t get a job anywhere in the world other than in politics to figure out how to spend the most and get the least, etc.), so they’re not even putting back into the economy what they’re taking out. All they’re doing is providing corporate welfare for the industries they like (and the ones they like are the ones who give them money for their campaign and shower them with gifts). You talk of the federal government as though it is the engine by which wealth is generated when in reality, is a net destroyer of wealth. That’s why no matter what they do, no matter what they spend, no matter how much they devalue our currency with quantitative easing, they haven’t been able to make any kind of positive change in the economy. Their gun is out of bullets; they need to raise the white flag, back out of the way and let the free market right itself before it’s too late.
      - Burger
        
        First, there are no real “cuts” in option 1. What a “cut” is to the government and everyone else two different things.
        
        For the government, a cut means that the program doesn’t have a budget larger than the previous year. Over the last 30+ years, for the federal government run by either party, the government has grown several percentage points greater than GDP plus population growth. Now, the “cuts” in part 1 are merely either maintaining the status quo in a particular budget or growing at less than inflation for any non-defense non-discretionary budget item.
        
        Option three is 50% cut in defense and a 50% cut in everything else over a 10 year period. That equates out to 700 billion for defense and 700 billion in the rest (do the math and we are talking about 70 billion a year or .004 of the entire 2010 GDP each year). Some of the rest include cuts in non-defense non-discretionary items but some of it includes cuts to medicare providers – i.e. cram downs so that a doctor takes less to do the same procedure the doctor will normally do. What that will mean is more retirements on the part of doctors or more doctors not taking medicare.
      - Bender
        
        “Cuts” over a ten-year period are illusory and fraudulent.
        
        This Congress has ZERO power, much less constitutional authority, to control or dictate what some other Congress ten years from now will spend.
        
        It is a farce. A lie. A deceit.
        
        Sad thing is, way too many people still buy into these lies.
        
        The only thing that this Congress can do is to add to the debt and, hence, the crushing interest payments that future people will be forced to pay.
      - Bender
        
        The United States is going to be way past bankrupt within ten years under the current plans for “cuts.”
        
        And, for those who don’t get it, math is math, numbers are numbers, and words (like “cut”) mean things, whether it is a family budget or the budget of the richest and greediest entity in the world.
      - ZoningVictim
        
        To illustrate Burger’s point, the $30+ billion the Republicans pat themselves on the back for cutting out of Obama’s 2011 budget weren’t year over year spending reductions because the CBO estimates we will spend $133 billion more in 2011 than we did in 2010 (for a total of $851 billion more than we spent in 2008). Only a politician would call that a cut.
        
        Bender, you are absolutely right; it’s just another parlor trick. Smoke and mirrors to hide the fact that we are once again kicking the can down the road. That is exactly why we need a balanced budget amendment.
      - normal
        
        It’s only fraudulent if you think too much of it.
        
        Congress clearly says it’s only a plan when they pass it. What is it supposed to do, think only in one-year increments?
        
        By your standard, all laws and appropriations are fraudulent because Congress could change them at any time in the future.
      - ZoningVictim
        
        What it’s supposed to do is suck it up and balance the budget this year, next year and the year after.
    - bred
      
      Sears could move into the new 30 story building planned across from the metro in Rosslyn. The NEW sears tower, now that the one in Chicago no longer has that name.
      - SaveDaveMcKenna
        
        They need to add a glass bottomed skywalk that connects to G’town.
        
        Currently no Sears in Arlington, but they could move into the giant empty box that used to be the Shirlington Wal-Mart.
      - Josh S
        
        It will always be the Sears Tower to me. Unbelieveable that the new owners had the gall to change it.
      - Southeast Jerome
        
        is that a serious comment?
        
        Although Sears’ naming rights expired in 2003, the building continued to be called the Sears Tower for several years. In March 2009 London-based insurance broker Willis Group Holdings, agreed to lease a portion of the building and obtained the building’s naming rights.[6] On July 16, 2009, the building was officially renamed the Willis Tower.
        
        I hope you dont vote.
      - Josh S
        
        Don’t understand your attitude at all.
        
        Yes, it was a serious comment. I fully understand that the naming rights were obtained in a deal. I understand that this deal is legal.
        
        It’s still the Sears Tower to me and always will be.
        
        BTW, I don’t call it “Reagan National Airport” either. It’s National.
        
        If some corporation ever buys Fenway Park and changes the name, I won’t use the new name.
        
        For example.
      - Southeast Jerome
        
        Thats just totally irrational to me. If something has a new name – it should be referred to that as such. Do you not recognize women who change their last names when they get married?
        
        Sure – it was called “Sears Tower” for the first part of its life but now it has a new name and should be referred to correctly.
      - Clarendude
        
        @Josh – I think the name is officially –
        
        Ronald Reagan Washington National Airport
        
        So, Reagan National, Washington National or just National are shortened versions of that. I prefer just the traditional ‘National’ too.
      - Bluemontsince1961
        
        @Josh, I know what you mean. I still call DCA “National Airport”, Virginia Hospital Center “Arlington Hospital”, and I-395 “Shirley Highway”.
      - LyonParker
        
        You betcha. US Cellular Field will always be the “New Comisky” and the Sears Tower will always be the Sears Tower to me… whachoo talking about, Willis?!
- Overgrown Bush
  
  Agree.
- Arlwhenever
  
  Aiming to sell and move on, that about sums it up.
- RosslynBoom
  
  sweet!
steve85

Hopefully things won’t get too bad
CW

Ask this question again in 3 years.

I’m not taking out a mortgage anytime soon, I’ll put it that way. I don’t want to owe anyone a dime in this climate. And I think the Arlington real estate market is overheated and overvalued even with the flow of money we’ve had coming in these past years.
- JamesE
  
  When I see new 1 bedrooms for 450k+ I wonder what kind of moron would actually buy that. That is almost 200k more than I have left on my mortgage.
  - Southeast Jerome
    
    $450K for a one bedroom? Thats a steal in Clarendon compared to Lyon Place (above Circa) where you can pay $3000/month for a 1 bedroom.
    
    For those counting, if you live there for 30 years, you’d pay $1.08MM and not even own it.
    
    My question….who is the bigger dope, the renter or the buyer?
    
    Just wait five years and see how much they can get for one of those places. Overheated is an understatement my friends. In gold we trust.
    - CW
      
      Ehh, you’re comparing apples and chocolate-dipped oranges. Those $3k a month units are the penthouse ones way up on the top floors, often with primo views and big dedicated patios. Those same units would sell for big money in condo buildings too. The gaslight building is advertising $700k for their 1BRs.
      
      You’re also not counting the at least $500 a month in condo fees. Or the interest on a mortgage, which would make that $450k condo cost, what, $600k or more? Or taxes, amortized out to maybe $300 extra a month. Sum that over 30 years. Or replacing your own appliances. Etc.
      
      I think that both the rental market and the purchase market are way overheated, and frankly I’d be relieved to see some normalization. This isn’t NY or LA, folks. DC is not as big and not as urban. If it comes down to where young non-lawyer professional can think about maybe getting into the market, I say that’s a good thing. But for now, I’ll take a high monthly rent over a big question mark.
Brandon

A point of clarification: The debt/deficit package enacted earlier this month will not “decrease” federal spending. Rather, it will slow the rate at which federal spending increases.

An anal retentive but important semantic distinction that most fail to grasp.
- AllenB
  
  This is a very important point. Not many people will be out of jobs… there will just be less new ones. And for many agencies, the reductions will be in field offices, those scattered around the country. We’ll certainly have some here but not a huge impact.
  
  Will our economy here grow at a slower rate? Definitely. But there’s no doom and gloom coming for us locally.
  - ClizzleDizzle
    
    Another key factor is demographics, a lot of civil servants are going to retire in the next 10 to 20 years, while not all those vacancies will be filled it will definitely give us young people some opportunities.
    - Josh S
      
      I guess that’s true, but I just wanted to point out that people have been saying that for fifteen-twenty years now.
      - CW
        
        Yeah…then they keep raising the retirement age and everybody stays put!
      - Southeast Jerome
        
        And as the stock market keeps falling and housing prices keep falling, the boomer generation will have to work longer.
        
        The generation just now starting to work will have to work til they croak b/c there wil be no social security, gas wil be $10/gallon, apartments in Clarendon will be $5000/month, dr visits will be $1000 and they will be getting paid the same they are today.
      - CW
        
        I’m not going to have much sympathy for the boomer generation. They probably got into the housing market in, what, the 80’s at the latest? Paid $100k for a place in Lyon Village that’s worth $2 mil now? Cash out, go buy a foreclosed beachfront palace in Florida and a boat, put the rest in bonds, and enjoy.
      - Bluemontsince1961
        
        @CW, that’s the truth! Used to be 65, I believe it is now 66 (11 years from now for me), I figure it’ll probably be 68 in another couple of years, and my personal best guess is that I’ll probably have to work until I’m 70.
canary

Keep a close eye on key economic indicators for Arlington: the number of cup cake and burger joints that are opening
R.Griffon

I think we could easily see a dip (or even a full-on bust) in the years ahead, but also remember that any kind of downturn will hurt outlying areas much more heavily than they will those closer in.

As an example, just look at the downturn in housing prices. During the bust of the past several years, some homes in the far outlying areas like Gainsville, Haymarket, and beyond have lost nearly half their value. While prices around Fairfax and Centreville are down 20-30%. Here in Arlington? Slight dips, holding steady, or even increasing depending on where and when you’re looking.

Not to say we’ll never be affected. Just that we should be affected appreciably LESS than others.
Roquer

Nice try ArlNow. You can’t separate the liberal County Board from the liberal Obama government. The economy sucks because of Obama.The ONLY reason it doesn’t suck quite so much in a few parts of Arlington is because Arlington is mostly government or retired government employees who are well paid, and also because these employees NEED to live someplace close to their work. So the houses in Arlington didn’t go down like the rest of the country. However, the rest of the economy, taxes, gas prices, food prices, other prices, suck…..just the same as the rest of the country. So again, nice try ArlNow, for trying to make it appear as though ‘local’ economy is somehow unconnected to the rest of the country.It’s not unconnected. Local economy sucks too.
- David Stockperson
  
  Perhaps if we give tax cuts to the richest among us, it will trickle down and a few jobs may materialize for the rest. Oh, wait, we already tried that and it didn’t work.
  - CW
    
    You mean the rich won’t just hoard cash instead of going out and giving their money to the working class? I can’t believe it!
MC

Arlington is a great location, and worthy of organizations seeking to relocate, and start ups seeking smart people. But DoD downsizing is going to be massive and bring with a sting to our local economy, on top of the BRAC. Other Federal downsizing (DHS, State, etc) will hit our local economy as well. We are about 18 months away from this, but watch out, it will be difficult.
Jake

Stop playing into the hype ARLNow.. This isn’t CNN..
There is no logical reason for the recent market woes, other than media scare tactics and sensationalism – oh and the idiots who buy into it

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