Black unemployment climbed to 7.5% by December 2025, a level that would signal a recession if it were experienced across the nation as a whole. For Washington, D.C., where government employment and federal policy decisions are deeply intertwined with the local economy, the new “State of the Dream 2026” report offers a stark warning about how national retrenchment is already showing up at home.
Released this week by the Joint Center for Political and Economic Studies, “State of the Dream 2026: From Regression to Signs of a Black Recession” examines how 2025 marked a year of economic reversal for Black America, driven by rising unemployment, federal job losses, weakened consumer protections, and policy shifts affecting technology, housing, and infrastructure.
The report draws on analysis from the Joint Center alongside partners including United for a Fair Economy, the Center for Economic Policy Research, the National Community Reinvestment Coalition, and the Onyx Impact Group.
In the District, the warning signs are already visible. The D.C. Department of Employment Services reported that the District’s seasonally adjusted unemployment rate stood at 6.5% in November 2025, up from 5.3% a year earlier.
Total employment among District residents fell by 6,000 over that period, even as the civilian labor force declined slightly. Private-sector employment dropped by 1,200 jobs in November, while the public sector added 400 jobs, masking deeper instability tied to federal policy shifts.
Those local figures mirror the national picture outlined in the Joint Center’s report. Black unemployment rose from 6.2% in January 2025 to 7.5% by December. Black youth experienced sharp volatility, with unemployment jumping from 18.6% in September to 29.8% in November before falling back to 18.3% in December.
Researchers estimate that if Black workers had maintained their 2024 prime-age employment rate, roughly 260,000 more Black adults would have been working in 2025, including about 200,000 prime-age Black women.
For Washington, the erosion of federal employment carries heavy weight. The report documents the elimination of roughly 271,000 federal jobs nationwide in less than a year, a move that disproportionately affected Black workers who have long relied on government service as a pathway to stable, middle-income employment. Prior to the cuts, Black Americans made up nearly 19% of the federal workforce, far exceeding their share of the overall labor force.
“Federal employment has historically functioned as a protected pathway to middle-income opportunity for Black workers,” the Joint Center wrote, noting that buyouts, hiring freezes, and the dismantling of diversity-focused recruitment pipelines removed a key economic stabilizer for Black communities, including those concentrated in the District and surrounding region.
Federal Legislation, Decisions Lead to Setbacks
Tax policy further tightened the squeeze.
The One Big Beautiful Bill Act of 2025 made permanent tax cuts for high-income households and corporations while reducing investments in programs that support low- and moderate-income families.
Business tax preferences such as Section 199A and estate tax benefits flowed overwhelmingly to wealthy households, while refundable credits relied upon by many Black workers were left unchanged.
The report concludes that these choices limited the federal government’s capacity to invest in workforce development, housing, and public services that are critical in high-cost regions like Washington.
The report also highlights setbacks in broadband policy with direct implications for the District. The cancellation of the Digital Equity Act, removal of mobile hotspots and school bus Wi‑Fi from E‑Rate eligibility, and weaker broadband pricing transparency rules threaten to slow progress in closing connectivity gaps. In a city where access to online services is essential for education, job searches, and access to government programs, the Joint Center warns that reduced digital access could deepen existing disparities.
Changes in the information ecosystem present additional challenges. While federal social media policy has remained largely unchanged, major platforms have pulled back on fact-checking and content moderation. The report notes that these platform-driven decisions reshape how information flows through communities, raising concerns about misinformation and civic engagement, particularly in majority-Black neighborhoods.
Artificial intelligence policy marked another shift with local consequences. A new executive order titled “Removing Barriers to American Leadership in Artificial Intelligence” moved federal policy away from precautionary regulation toward a more deregulatory posture. The Joint Center warns that without safeguards focused on civil rights and transparency, AI systems increasingly used in hiring, lending, housing, and public administration risk embedding bias into everyday decision-making.
Workforce policy changes compound the risk. While apprenticeship programs expanded in 2025, initiatives aimed at advancing African American workforce participation stalled or were eliminated. The report finds that this combination sets the stage for reinforcing racial inequality rather than closing gaps, particularly in sectors central to the District’s economy.
Housing remains one of the most entrenched challenges. Nationally, Black homeownership stands at 45%, compared with 74% for white households. In the Washington region, where housing costs remain among the highest in the country, the Joint Center warns that elevated interest rates, tighter credit, and weakened consumer protections threaten to widen that divide further.
“At a moment when hard-won rights and safeguards are being eroded, rigorous analysis is essential to building a fair economy,” Joint Center President Dedrick Asante-Muhammad said in the report.