United States: The Department of Government Efficiency (DOGE) operated by Elon Musk may face layoffs exceeding expected levels, according to an economist, because economic risks pose threats to both economic performance and market stability, which President Donald Trump uses to assess his success.
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The chief economist at Apollo Global Management, Torsten Slok, indicated that economic dangers are now causing significant concerns for both markets and the broader economy based on his analysis reported by forbes.com.
Slok predicts a million job losses from DOGE because traditional 300,000 reported job cuts omit secondary impacts on the 5.2 million individuals who work on federal contracts that face simultaneous cancellation by Musk and Trump.
Furthermore, Slok, who predicted a rise in the unemployment rate linked to government job cuts, said, “The near-term downside risks to the economy and markets are growing.”
Federal employees layoffs
The federal government employed more than 75,000 personnel through voluntary buyouts, and it conducted 220,000 potential probationary worker layoffs in organizations like the Internal Revenue Service and Forest Service.
The employment reductions constitute a rare occurrence in modern United States history because they resemble the adjustments carried out by former President Bill Clinton during his term.
The economy remains in a broad state of strength because unemployment reached 4 percent in January, and fourth-quarter economic output increased by 2.3 percent, which corresponds to typical historical numbers, forbes.com reported.
What more are the experts stating?
Source data from the System for Award Management demonstrates Lockheed Martin RTX and General Dynamics, together with a number of non-defense contractors Dell, Deloitte, Microsoft, and Pfizer, secured over USD one billion in each firm’s government contracts during 2023.
The combination of increased joblessness from DOGE layoffs and diminished GDP expansion because of reduced stimulus poses negative influences on financial markets, yet Michael Wilson from Morgan Stanley thinks such harsh effects will give way to an enduring market gain driven by fiscal stability.
DOGE’s operations will create economic slowing initially, yet long-term economic enhancement will be established as businesses expand and higher interest rates become feasible, according to Wilson in his client presentation on Monday.