The layoffs initiated by Elon Musk’s Department of Government Efficiency (DOGE) are anticipated to be larger than expected, according to a leading economist. These layoffs pose increasing risks to the broader economy and financial markets, which President Donald Trump often highlights as indicators of his success. Data shows that 66.5% of the federal workforce consists of contract workers, a significant rise from 50.7% in 2002. Over 75,000 federal employees accepted buyouts, and layoffs may impact up to 220,000 probationary workers across agencies like the IRS and Forest Service. Despite this, the economy remains robust with a 4% unemployment rate and a 2.3% GDP growth in Q4 2024. Major contractors such as Lockheed Martin and Microsoft received substantial government contracts in 2023. Prominent investor Steve Cohen expressed concerns about potential stock market corrections due to Trump’s policies. Although the S&P 500 rose post-election, it has since declined slightly. Morgan Stanley’s Michael Wilson suggests short-term economic challenges from DOGE’s actions may lead to long-term benefits through sustainable fiscal policies. — news from Forbes
