U.S. recession, U.S. stock market crash! Is it all due to Musk's "cuts"?

Layoffs in Washington may exceed one million, with soaring risks of U.S. economic recession and worsening job and housing markets.

Since Trump took office, the U.S. Department of Efficiency (DOGE) led by Musk has been unstoppable, and the epic purge of federal workers by the Trump administration is evolving into one of the most significant layoffs of this generation.

Callie Cox, Chief Market Strategist at Ritholtz Wealth Management, referred to this as: “The largest layoff in American history (far exceeding any other).”

Bloomberg reports that Northern Virginia, Washington D.C., and Maryland may be in the early stages of an economic recession, with rising unemployment claims and a surge in active housing listings, all of which signal a very grim economic outlook.

Data from Bright MLS indicates that the number of active housing listings in Washington D.C. continues to show about a 25% increase compared to the same week last year, and has risen by 4% from a week ago—well above the levels of the past three years, and this figure may further increase as layoffs related to DOGE intensify.

Moreover, the number of discounted listings in Washington D.C. is also on the rise, and with the arrival of the spring selling season, the median home price in Washington D.C. remains higher than in recent years.

The U.S. stock market is also under pressure, as overnight U.S. stocks were severely impacted by tariff threats, with the S&P 500 index closing down 1.6% at 5861 points, falling below the more critical mid-term CTA trigger level of 5887 points.

Bank of America analyst Michael Hartnett commented:

“The economic recession in Washington D.C. has begun.”

Why is this happening?

Analysts believe that layoffs of U.S. government personnel by DOGE will have serious ripple effects. On Thursday morning, Apollo's Chief Economist Torsten Slok warned in an interview with Bloomberg TV:

“The market generally expects the total number of layoffs related to DOGE to reach 300,000... however, research shows that for every federal employee, there are about two contractors behind them, so the number of layoffs could be close to one million.”

The well-known financial blog ZeroHedge also added that the latest employment market data shows that layoffs related to DOGE have already begun.

In recent years, overall spending by the U.S. government has been excessively high, with federal, state, and local governments, as well as sectors like education and health, experiencing excessive job growth. Therefore, if the Trump administration sets a precedent for layoffs and cuts government spending, it could trigger a chain reaction in the public sector, leading to new economic headwinds.**