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Mark Cuban warned the federal government’s abrupt and deep cuts are having spillover effects across the economy, eventually leading to a downturn. The latest jobs report showed solid gains, but it pointed to early effects of DOGE cuts and didn’t capture the wave of layoffs that have come more recently. Meanwhile, Wall Street is pricing in greater odds of a recession.
Billionaire investor Mark Cuban warned the spillover effects of the federal government’s massive cuts could send the economy into a downturn.
In a post on Bluesky on Sunday, he commented on another thread about federal contractors furloughing staff and slashing pay.
“This is a bigger issue than people realize. Not just jobs lost. But their families losing benefits. Landlords losing tenants. Cities and towns losing revenue. This is how recessions start,” Cuban wrote. “Ready Fire Aim is no way to govern.”
Since that warning, data about the labor market has raised some red flags. On Wednesday, ADP’s survey of private-sector payrolls found that just 77,000 jobs were added last month, well below expectations of 148,000 and January’s gain of 186,000.
Education and health services—sectors with exposure to government spending—saw a decline of 28,000. Meanwhile, businesses that would be affected by President Donald Trump’s tariffs, namely the trade, transportation and utility category, saw a loss of 33,000 jobs.
“Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” ADP Chief Economist Nela Richardson said in the report. “Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.”
On Thursday, the Challenger, Gray & Christmas report showed employers announced 172,017 layoffs last month, up 245% from January and the most since July 2020.
The staffing firm estimated that 62,242, or about one-third of those cuts, could be attributed to Elon Musk’s Department of Government Efficiency.
“With the impact of the Department of Government Efficiency [DOGE] actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies, job cuts soared in February,” Andrew Challenger, senior vice president and workplace expert for Challenger, Gray & Christmas, said in the report.
And on Friday, the Labor Department reported a gain of 151,000 jobs in February, below forecasts for 170,000. While hiring was still solid, the report showed federal government employment declined by 10,000. And the monthly survey period came before a recent wave of recent cuts, meaning the next report should reflect a fuller impact.
