If Elon Musk‘s Department of Government Efficiency succeeds in its efforts to seriously reduce federal employment, it would likely be enough to ding the overall U.S. labor market — but just create a little dent.
The big picture: Given the massive U.S. economy, even hundreds of thousands of people potentially losing their jobs isn’t enough to significantly move the overall unemployment rate.
But the impact on specific locations — the Washington, D.C., metro area in particular — could be greater.
By the numbers: The federal government employed 3 million people in December, per the Labor Department, but if you exclude the Postal Service and military, that number is 1.85 million.
If the Trump administration were to cut 20% of those jobs through buyouts, firings or pressure to quit, that would result in 370,000 current government employees out of work.
If every single one of those people were counted as unemployed, it would be enough to push the national unemployment rate to 4.3% from its current 4.1%.
However, that’s an unreasonable assumption, because many of those discharged employees would either retire (and thus no longer be part of the labor force) or quickly find new jobs. So the actual impact on headline unemployment would likely be lower.
The intrigue: It is a reminder of just how massive the U.S. labor market is. In December, 2.6 million Americans quit their jobs and 2 million were fired. A few hundred thousand government workers quitting or being forced out would only temporarily increase those numbers.
It would, however, be a big change from the norm; federal government employment is traditionally very stable.
In December, only 7,000 federal employees were laid off or fired, and 11,000 quit. Look for those numbers to go way up as 2025 data is released.
Of note: The economic impacts of large-scale federal job cuts on specific geographies are likely to be higher.
In the D.C. area, 11% of all jobs are with the federal government
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If the Trump administration eliminated 20% of D.C.-area federal jobs and all of those people became unemployed, the local unemployment rate would nearly double to 5.5%, from its 2.8% December level. (But given the caveats above, the actual impact would certainly be lower than that.)
What they’re saying: “It is too early for these to affect the January numbers,” wrote BNP Paribas economists in a note. Employment numbers due out Friday cover a period before the inauguration.
“That said, [the buyouts] suggest net downward pressure on federal employment over time,” they wrote.
Steve Forbes, editor-in-chief of Forbes Media, Sunday on X: “NEW: Thanks to Bidenomics, President Trump inherited a fragile economy. Putting tax cuts (for all Americans) first before tariffs will help the economy surge, empowering him to make better trade deals long-term.”
President Donald Trump indicated that he’s optimistic when asked about the current state of the economy on Tuesday after previously sidestepping questions about fears of a potential recession.
Why It Matters
Reacting to the growing fears of a tariff war, the stock market had its worst day of the year this week. Since taking office in January, the president has initiated sweeping changes, including implementing tariffs on Canada, Mexico and China.
While speaking to reporters on Tuesday, Trump was asked about the current state of the stock market and said, “Our country had to do this. We had to go and do this. They’ve taken away, other countries have taken away our business, they’ve taken away our jobs. I did it initially very strongly against as you know China and some others in the first term.”
Continuing, Trump said, “We had the greatest economy in the history of our country.”
He said that after his first presidential term, he handed over the stock market to the Biden administration “higher than it ever was to that point before,” adding that “this economy, in my opinion, is going to blow it away.”
Trump was seen answering questions alongside Department of Government Efficiency leader Elon Musk in front of vehicles from Tesla, one of the billionaire’s companies. “I’m very optimistic about the country,” Trump said.
Over the weekend, Trump was asked if he thought the country was heading toward a full-scale recession. He replied, in part, that the economy is in a “period of transition” while noting that he hates to predict a potential recession.
Economic analyst and former Obama official Steven Rattner said Tuesday on X, formerly Twitter: “Republicans are trying to blame the current economic downturn on ‘Biden’s Economy’. But America’s markets surged ahead of Europe’s under Biden and then fell far behind once Trump got started.”
Former Republican Representative Joe Walsh, Tuesday on X: “Trump was handed an awesome economy. He was handed the best, by far, post-Covid economy of ANY industrialized nation. He was handed an economy with employment way up, consumer spending way up, the markets way up, & inflation way down. And in only 7 weeks, he’s f****** it all up.”
Democratic Governor of Illinois JB Pritzker, Tuesday on X: “Who pays for Donald Trump’s tariffs on Canada? It’s you. Actions have consequences – and his actions mean higher prices for groceries, beer, gas, and housing all to fund tax cuts for his friends at Mar-a-Lago.”
Steve Forbes, editor-in-chief of Forbes Media, Sunday on X: “NEW: Thanks to Bidenomics, President Trump inherited a fragile economy. Putting tax cuts (for all Americans) first before tariffs will help the economy surge, empowering him to make better trade deals long-term.”
What Happens Next
Canadian Premier Doug Ford said in a joint statement with U.S. Secretary of Commerce Howard Lutnick posted to X that the 25 percent surcharge on electricity exports to Minnesota, Michigan, and New York will be suspended. He will travel to Washington, D.C., to meet before a tariff deadline.
New data suggests a notable deceleration in the U.S. inflation rate, potentially offering some relief to both consumers and policymakers.
According to Truflation, a blockchain-based provider of real-time economic data, inflation has slowed to around 1.3 percent, having dropped to below the 1.5 percent mark at the start of March. By Truflation’s readings, these are the lowest levels inflation has reached since December 2020. It peaked at over 11.5 percent in June 2022.
Why It Matters
Trump’s campaign placed a heavy emphasis on the state of the U.S. economy and in particular inflation, painting his predecessor’s policies as an accelerant and vowing to bring prices for American consumers down “on Day One.”
Prior to his November victory, Trump had been a persistent and outspoken critic of “Bidenomics,” holding the then-president responsible for the nation’s inflationary struggles, which he called “a country killer.” As a result, inflation has become arguably the most important touchstone for the current administration, and will be a closely watched metric to measure his economic agenda.
While inflation will need to slow further—reaching negative figures—for the price of goods and services to decline, significantly slowing inflation signals price stabilization, serving as a slight relief for concerned consumers and the Federal Reserve, which has been tasked with achieving a 2-percent inflation target.
What To Know
As outlined on its methodology page, Truflation’s real-time inflation metric relies on market price data from more than 30 commercial and public sources, capturing 13 million price points for goods and services at any moment. This separates it from the commonly consulted consumer price index (CPI), released monthly by the Bureau of Labor Statistics (BLS), which relies on periodic surveys, though this allows time to both collect and verify data, while also enabling analysis of inflationary trends rather than daily price changes.
According to the most recent BLS reading, released Wednesday morning, February saw less steep price increases for consumers. The Consumer Price Index (CPI) rose by 0.2 percent, a slowdown from January’s monthly 0.5 percent gain. Annual inflation also showed signs of improvement, easing to 2.8 percent from 3.0 the previous month.
The core inflation rate—excluding volatile prices such as those for food and energy—slowed to 3.1 from 3.3 percent annually, the lowest rate since April 2021. On a monthly basis, core inflation fell to 0.2 from 0.4 percent.
All measures came in better than had been anticipated in analyst forecasts compiled by TradingEconomics.
Despite the encouraging signals from both Truflation and the BLS, concerns are mounting that President Trump’s dynamic tariff plans could result in even higher prices, as import costs rise and these charges are passed on to the American consumer.
Slowing inflation, while potentially easing the burden on consumers, has also been cited as evidence of weakening demand and slowing economic activity.
What People Are Saying
Truflation, on X, formerly Twitter: “Our data shows that inflation is falling. However, the effect of tariffs remains uncertain.” Attached was a poll in which 66 percent said inflation “will be controlled by 2025.”
White House Press Secretary Karoline Leavitt: “Today’s CPI report shows inflation is declining and the economy is moving in the right direction under President Trump. Core consumer prices, which is the best measure of inflation, dropped to its lowest level in FOUR years. This inflation report, much like last week’s jobs report, is far better than the media predicted and the so-called ‘experts’ expected. When will they learn to stop doubting President Trump? As he successfully did in his first term, President Trump is driving down costs through massive deregulation and energy dominance. The entire Trump Administration will continue to focus on fixing the economic and inflation nightmare created by the Biden-Harris Administration to unlock the Golden Age of America.”
Jeffrey Roach, chief economist for LPL Financial, in comments shared with Newsweek: “Core services inflation is unequivocally decelerating, giving the Fed room to focus on the growth mandate. In the near term, we may see some volatility in consumer prices as businesses and consumers anticipate looming tariffs.”
Federal Reserve Chair Jerome Powell, at a recent policy forum in New York: “Despite elevated levels of uncertainty, the U.S. economy continues to be in a good place. The labor market is solid, and inflation has moved closer to our 2 percent longer-run goal.
“Looking ahead, the new Administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy. While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their likely effects remains high.”
Treasury Secretary Scott Bessent,at the Economic Club of New York last week, said that the inflationary impacts of tariffs would be “transitory” if they resulted in a “one-time price adjustment. Across a continuum, I’m not worried about inflation.”
What Happens Next
The next inflation reading from the BLS will be released on April 10.
Update 3/12/25 10:41 a.m. ET: This article was updated with data from Wednesday’s inflation reading from the Bureau of Labor Statistics, and comment from Jeffrey Roach of LPL Financial.
Pelosi is sticking her nose where it doesn’t belong in spite of her face. She doesn’t count anymore. She still is trying to hurt the country because she hates the President. I really think she is in love with him and is mad because he doesn’t give her the time of day like Obama – gave her kisses.
****
A non pass would be a Country destroyer, approval will lead us to new heights. Again, really good and smart move by Senator Schumer. This could lead to something big for the USA, a whole new direction and beginning!”
Newsweek
Schumer Concedes To Pressure Of Looming Shutdown And Will Vote For CR
Newsweek reached out to Schumer’s office by email for comment on Friday afternoon.
Why It Matters
The U.S. government faces an imminent shutdown if Congress does not pass a funding bill. Failure to agree a deal by Friday at midnight will result in federal workers going on furlough and not receiving pay while nonessential government functions would be put on pause.
What To Know
House Speaker Mike Johnson of Louisiana, a Republican, put forward a stopgap bill, referred to as the continuing resolution (CR), over the weekend that would prevent the shutdown by maintaining current spending levels until September while reducing Justice Department state and local law enforcement assistance.
The House passed the bill, which takes it to the Senate, where the bill requires 60 votes to pass, and Republicans have only 53 seats. Schumer initially stood firmly on the position that “our caucus is unified on a clean April 11 CR” and that “Republicans do not have the votes.”
However, he reversed course on Thursday, declaring that he would support the CR, arguing that “it is my job to make the best choice for the country to minimize the harms to the American people. Therefore, I will vote to keep the government open and not shut it down.
Schumer added that President Donald Trump ” has taken a blowtorch to our country and wielded chaos like a weapon. For Donald Trump, a shutdown would be a gift. It would be the best distraction he could ask for from his awful agenda.”
One of the more stunning responses on Friday came from Pelosi, who seemingly urged Senate Democrats to defy Schumer. In a statement posted on X, formerly Twitter, at around noon ET, Pelosi wrote:
“Donald Trump and Elon Musk have offered the Congress a false choice between a government shutdown or a blank check that makes a devastating assault on the well-being of working families across America.”
“Let’s be clear: neither is a good option for the American people. But this false choice that some are buying instead of fighting is unacceptable,” Pelosi wrote. “I salute Leader Hakeem Jeffries for his courageous rejection of this false choice, and I am proud of my colleagues in the House Democratic Caucus for their overwhelming vote against this bill.”
“Democratic senators should listen to the women,” Pelosi continued. “Appropriations leaders Rosa DeLauro and Patty Murray have eloquently presented the case that we must have a better choice: a four-week funding extension to keep government open and negotiate a bipartisan agreement.”
“America has experienced a Trump shutdown before – but this damaging legislation only makes matters worse,” she added. “Democrats must not buy into this false choice. We must fight back for a better way. Listen to the women, For The People.”
What People Are Saying
President Donald Trump wrote on Truth Social: “Congratulations to Chuck Schumer for doing the right thing — Took “guts” and courage! The big Tax Cuts, L.A. fire fix, Debt Ceiling Bill, and so much more, is coming. We should all work together on that very dangerous situation. A non pass would be a Country destroyer, approval will lead us to new heights. Again, really good and smart move by Senator Schumer. This could lead to something big for the USA, a whole new direction and beginning!”
Senate Majority Leader John Thune, a Republican, on Thursday said: “It’s time for Democrats to fish or cut bait. Democrats need to decide if they’re going to support funding legislation that came over from the House or if they’re going to shut down the government. So far, it looks like they plan to shut it down.”
Senator Andy Kim of New Jersey, a Democrat, wrote on X: “I don’t want a shutdown but I can’t vote for this overreach of power, giving Trump and Musk unchecked power to line their pockets.”
Representative Alexandria Ocasio-Cortez of New York, a Democrat, told reporters following Schumer’s remarks: “This is about deep cuts to Social Security, Medicare, Medicaid… the evisceration of the federal government… codifying the looting that is happening at the behest of Elon Musk in order to pay for his tax breaks for billionaires,” adding, “I think there is a deep sense of outrage and betrayal.”
What Happens Next
The Senate on Friday will vote on the CR, with a deadline of midnight to agree to a deal or face a government shutdown.
Update, 3/14/2025 at 1:56 p.m. ET: This article has been updated with additional information, context and comments.
Newsweek
