Investor Danny Moses warns that markets have not yet factored in the economic impact of massive government job cuts, which will disproportionately affect private contractors, small businesses, and the labor market.
The Department of Government Efficiency’s recent layoffs have jeopardized tens of thousands of jobs, including 24,000 federal workers who have been fired or left their jobs. Many expect difficulty finding new jobs due to the specificity of their expertise. While some experts argue that the cuts will lead to cost savings, Moses believes investors are underestimating the negative economic impact.
“We’re hurting the revenue side of the equation,” Moses said in an interview. “We think we are being overly optimistic about how this is going to play out.”
The cuts will have a ripple effect on the economy, with many small businesses and private contractors losing contracts worth billions of dollars. Accenture’s CEO told investors that the company lost US government contracts as part of DOGE’s review, leading to a 7.3% decline in its share price.
Moses argues that this creates an “unvirtuous cycle,” where former federal workers struggle to find new jobs due to shrinking revenue streams in government contracts. Many will have difficulty adapting to the private sector job market, particularly in tech and data science, which are currently scarce.
The impact of these cuts on consumer confidence is already being felt, with a recent slowdown seen in consumer spending. If many federal workers fail to find new jobs, spending will slow, hitting the US economy, which accounts for nearly 70% of consumer spending.
As Moses warned, “the economy is indisputably made up of people and their wallets.” Disruptions to spending will have far-reaching consequences, making it essential for investors to consider the economic impact of government job cuts.
Source: https://fortune.com/2025/03/21/the-big-short-danny-moses-doge-stock-market-impact