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Report

Federal Spending, Especially on Security, Kept Washington Economy Growing in 2002

Stephen S. Fuller

Findings

An analysis of federal spending in the Washington, D.C. metropolitan area in Fiscal Year 2002 reveals that:

  • Total federal spending in the Washington region increased by more than 10 percent in 2002. Federal spending went up $8.25 billion, buffering the effects of an otherwise slow economy, and enabling the region to register net job gains in 2002 when no other major metropolitan area did. Federal spending now accounts for $87.5 billion, or about one-third of the area’s gross regional product.

  • Procurement spending paced the gains, jumping by 15 percent, or $4.7 billion, in the region to reach $36.1 billion in 2002. Procurement spending in greater Washington increased by $4.7 billion, the largest dollar rise ever, and more than double the previous year’s increase.

  • Increased procurement for homeland security and the war on terrorism drove the unusually large growth in overall procurement spending in the region. These purchases pushed federal procurement above historic trends and clearly benefited the region economically.

In sum, federal spending related to the war on terrorism preserved the vitally of the Washington-area economy in the face of national stagnation in 2002.

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