Elon Musk’s D.O.G.E is Destroying the Job Market in the U.S.

The American job market is currently collapsing, not due to a recession or financial crisis, but due to Elon Musk’s D.O.G.E. Last month alone, a staggering 172,017 jobs were cut, according to data from coaching company Challenger, Gray & Christmas. This is an increase of 103% compared to 2024, bringing the total number of layoffs this year to 221,812, the highest number since 2009.

The biggest shock came from an unprecedented increase in government layoffs. In just one year, the number of layoffs in the public sector increased by 41,311%. These figures had to be checked multiple times by analysts to ensure their accuracy. The number of layoffs in Washington D.C. alone rose from 60 in 2024 to 61,795 in 2025, triggering an economic chain reaction.

D.O.G.E crashes local economy

The housing market in the capital has also crashed, unemployment claims are piling up, and companies dependent on government contracts are going bankrupt. According to Challenger, Gray & Christmas, the month-on-month increase of 245% in February was the highest since July 2020. The company warned that these losses, combined with the D.O.G.E.-related layoffs, could cause the American job market to collapse by the second quarter of this year.

The number of new unemployment claims rose by 22,000 to 242,000 nationwide in the last week of February. Washington D.C. is the hardest-hit region, with claims rising by 26% due to D.O.G.E. layoffs.

The impact of D.O.G.E. layoffs extends beyond just the job market. Interest rates have dropped by 60 basis points in the past six weeks, and while inflation remains high, the market is already anticipating a downturn. According to Julia Pollak, a labor economist, this trend is unprecedented:

“Even during previous economic downturns, we did not see federal layoffs on this scale. What we are experiencing now could set the job market back years.”

The crisis is unfolding against a backdrop of Trump’s rapidly changing trade tariffs and volatility in the crypto and stock markets, which are undermining confidence in the economy. The White House announced on Thursday that it will pause some of the 25% tariffs on Mexican and Canadian goods under the USMCA until April 2. However, economists fear that these levies will lead to higher prices for consumers and slower economic growth.

Meanwhile, the Trump administration is restructuring federal hiring policy, making it more difficult for non-political appointments to get a job. There are reports that the White House is screening candidates for loyalty to Trump’s second-term policy.

American geopolitical decisions also under pressure

Scott Bessent, Secretary of the Treasury, warned that sanctions on Russian energy may be extended, which would only worsen the economic situation. In addition, European leaders have been informed that Trump is linking a US-Ukrainian mining contract to a ceasefire with Russia. Such a decision could have major geopolitical implications.

At the same time, the flow of imports into the US is breaking records, with gold traders massively transporting precious metal to New York. This unexpected surge in gold imports has increased the US trade deficit, putting additional pressure on domestic markets.

Patrick Harker, Philadelphia Fed President, acknowledged these risks on Thursday and warned:

“Business and consumer confidence is starting to decline, and that’s not a good sign.”

The next meeting of the Federal Reserve is scheduled for March 18 and 19. Fed Chairman Jerome Powell and his team will discuss whether Trump’s wave of layoffs necessitates a rate cut, despite their previous stance not to lower rates in the short term.