What sequester? Washington booms as new Gilded Age takes root

The new moneyed brain trust is being led by professionals in defense, intelligence and data—many of whom excelled initially due to government ties. They’ve propelled the D.C. region as a leader in the cybersecurity and data sectors, as well as in more-specialized arenas including educational products and health-care data management.

In the first decade of the 21st Century, government spending was the major source of growth in metropolitan D.C., an area that includes the neighboring Maryland and Virginia suburbs. In 2010, federal spending, comprising mostly private-sector contracts, made up 40% of the local economy.

By 2012, that proportion had slipped by four percentage points. But the local economy has still grown faster than the nation as a whole and is projected to continue doing so at least through 2017, says economist Stephen Fuller, a George Mason University professor and an expert on the D.C. regional economy. Its nearly $450 billion economy puts the D.C. region in fourth place nationally, behind the more-populous regions of New York, Los Angeles and Chicago, and ahead of Houston.

George Mason economists expect the area’s annual GDP growth to accelerate by 2017 to 3.2% from 2.1% now, outpacing the rest of the country’s 2.9% projected rate. The D.C. forecast takes into account the potential effect this year of the across-the-board budget cuts known as the sequester. The cuts have so far not had the dire impact on local jobs that the White House and a range of economists predicted, largely because government agencies and federal contractors trimmed nonlabor costs to avoid heavier layoffs after the sequester kicked in March 1.