Washington's Struggling Economy Takes Another Economic Hit from the Government Shutdown

 A person walks toward the entrance of the Capital Area Food Bank, Thursday, Nov. 6, 2025, in Washington. (AP Photo/Mark Schiefelbein)
A person walks toward the entrance of the Capital Area Food Bank, Thursday, Nov. 6, 2025, in Washington. (AP Photo/Mark Schiefelbein)
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Washington's Struggling Economy Takes Another Economic Hit from the Government Shutdown

 A person walks toward the entrance of the Capital Area Food Bank, Thursday, Nov. 6, 2025, in Washington. (AP Photo/Mark Schiefelbein)
A person walks toward the entrance of the Capital Area Food Bank, Thursday, Nov. 6, 2025, in Washington. (AP Photo/Mark Schiefelbein)

With the combination of the longest government shutdown, the mass firings of government workers and a fresh cut in federal food aid, the Capital Area Food Bank in Washington is bracing for the swell of people who will need its help before the holiday season.

The food bank, which serves 400 pantries and aid organizations in the District of Columbia, northern Virginia and two Maryland counties, is providing 8 million more meals than it had prepared to this budget year — a nearly 20% increase, The AP news reported.

The city is being hit “especially hard," said Radha Muthiah, the group's CEO and president, "because of the sequence of events that has occurred over the course of this year."

The nation's capital has been battered by a series of decisions by the Trump administration, from the layoffs of federal workers to the ongoing law enforcement intervention into the district. The added blow of the shutdown, which has furloughed workers and paused money for food assistance, is only deepening the economic toll.

The latest figures from the D.C. Office of Revenue Analysis do not account for workforce changes since the shutdown that began Oct. 1. But even the September jobs report shows that the seasonally adjusted unemployment rate hovers at 6%, compared with the most recent national rate of 4.3%, and has been the highest in the nation for months.

The economic woes appear to be reverberating politically. Democrat Abigail Spanberger won election Tuesday as Virginia's governor after focusing her campaign message on the effects of President Donald Trump's actions on the state’s economy.

The shutdown's long-term impact on the regional economy will be felt long after the government reopens, experts say.

Local businesses feeling the crunch Washington has the country's largest share of federal workers — about 20%, according to official figures — and roughly 150,000 federal employees call the area home. By Monday, hundreds of thousands of federal workers across the country will have missed at least two full paychecks because of the shutdown. Nationally, at least 670,000 federal employees are furloughed, while about 730,000 are working without pay, according to the Bipartisan Policy Center.

During the shutdown, the number of federal employees on Washington’s transit system each weekday has dropped by about one-quarter compared with ridership in September. Eateries that the Restaurant Association of Greater Washington says were already dealing with thin margins from seasonal declines and the fallout from Trump’s deployment of armed National Guard members on city streets are facing more challenges at a time when owners had hoped for a rebound.

Tracy Hadden Loh, a fellow at Brookings Metro, a think tank, said that going without paychecks is causing significant cash flow issues for federal workers, potentially leading to defaults on mortgages and student loans. For local businesses, especially those reliant on federal workers’ discretionary spending, it could exacerbate the impact during the high-sales October-December quarter.

“A lot of businesses rely on higher spending in Q4 in order to have a revenue positive year,” Loh said.

Small businesses are feeling the loss of that spending.

The crowd watching Liverpool's Premier League game last weekend would have been standing room only at The Queen Vic, a bar in Northeast Washington. But that was not the case, said Ryan Gordon, co-owner of the British pub.

“We still had seats for people, which means the bars around us who get our overflow got nothing,” Gordon said.

Business is down about 50% compared with what it was before the shutdown, he said. He considers himself lucky in the local restaurant scene because he owns the building and does not have to pay rent.

“To the extent to which discretionary spending by D.C. area households is limited, that could push a lot of local businesses into the red,” Loh said. The culmination of the shutdown, cut in SNAP benefits and layoffs are weighing heavy on households that have never sought help before, she added.

A family gets squeezed out of the region Thea Price was fired from her job at the U.S. Institute of Peace in March of this year, part of the wave of layoffs meant to shrink the size of the federal government. Her husband, a government contractor, also lost his job at a museum. Since then, they have lived on savings, Medicaid and SNAP.

Price, 37, recently went to a food pantry in Arlington, Virginia, for the first time recently. The shutdown halted funding for SNAP, after it took her months to get it, and the $500 payments she receives each month were set to stop. Virginia sent a partial payment but it was not enough, Price said. With her options to sustain herself and her family running out, Price is moving back to her hometown in the Seattle area.

“We can’t afford to stay in the area any longer and hope that something might pan out,” she said. “We’re just in a much different place than when these things started in March.”

At the Capital Area Food Bank in Northeast Washington, forklifts sped around in a controlled chaos, unloading trucks, moving food and preparing for a distribution set up for federal employees and contractors, and preparations are intensifying with the holiday season in mind. The organization is expecting to provide 1 million more meals this month than it had anticipated before the shutdown.

“We’re very focused obviously on the immediacy of all of these impacts today and getting food to those who need it," said Muthiah, the group's director. But she cautioned there were long-term implications to the unfolding crisis, with people tapping their savings and retirement funds to get by.

“People are borrowing against their futures to be able to pay for basic necessities today,” she said.



IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.


Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.


Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.