Key points
- Trump, Musk target govt contracts and grants
- 75,000 US govt workers took a buyout
- DOGE layoffs and contract cuts cause concerns
ISLAMABAD: A prominent economist has warned that layoffs from the US Department of Government Efficiency (DOGE) headed by billionaire Elon Musk could be as high as 1 million.
Apollo Global Management chief economist Torsten Slok has also cautioned about DOGE-led “growing” risks on the broader economy—and the markets, which President Donald Trump has always emphasised as a key barometer of his success.
“We are starting to worry about the downside risks to the economy and markets,” Torsten Slok said in a post.
Slok named the “impact of DOGE layoffs and contract cuts” as his primary concern.
We are starting to worry about the downside risks to the economy and markets.” – Apollo Global Management chief economist Torsten Slok
According to Forbes, the economist noted that the oft-cited roughly 300,000 potential layoffs do not account for the impact on the 5.2 million-person federal contractor workforce as Musk and President Donald Trump simultaneously target government contracts and grants.
Slok, who predicted a rise in the unemployment rate tied to the government job cuts, concluded his note: “The near-term downside risks to the economy and markets are growing.”
Large scale
According to the Brookings Institution analysis of data from 2023’s fiscal year, 66.5 per cent is the proportion of contract workers comprising the broader federal workforce which includes civil, military and postal workers.
In 2002, contractors made up only 50.7 per cent of the federal workforce.
READ ALSO: Trump Offers 2 Million Federal Employees Buyout to Save $100 Billion and Shrink Government
More than 75,000 federal government employees voluntarily took a buyout, while layoffs that could affect up to 220,000 probationary workers have been carried out at agencies including the Internal Revenue Service and the Forest Service, Forbes reported.
Historically abnormal
Those layoffs are historically abnormal dating back to World War II, mirroring only what Bill Clinton did in shrinking Washington’s footprint.
The economy is broadly strong, as unemployment was 4 per cent in January and economic output grew at 2.3 per cent during 2024’s fourth quarter, both in line with historic norms.
