The latest Challenger Report showed U.S. job cuts surged to 172,017 in February with Elon Musk’s Department of Government Efficiency (DOGE) significantly contributing to this number. The federal government eliminated 62,242 workers last month and 62,530 year-to-date, which is a 41,311% increase compared to the 151 cuts in the same period of 2024.
DOGE’s contribution to the Challenger Report caused job cuts to reach their highest level since July 2020, when the COVID-19 pandemic caused havoc for the job market. It also marks the highest February job cuts since 2009 when the recession was in full force. February job cuts were also up 103% compared to February 2024 and 245% from the 49,795 reported last month.
DOGE’s actions also have East U.S. seeing the largest percentage of February job cut increases year-over-year at 109%. That makes sense as federal agencies are largely located in the D.C. area. Job cuts in the Midwest jumped 61%, while West and South job cuts dropped 10% and 40.1%, respectively.
What’s Next for the Job Market?
If Musk gets his way, DOGE will cut even more government jobs. A judge has blocked a decision by the government that would have cut an additional 200,000 workers still in their probation period. Depending on the outcome of this legal battle, more government job cuts could be on the horizon.
How Does This Affect the Stock Market?
DOGE isn’t just cutting federal jobs. The agency is also eliminating government contracts as it continues it mission of sniffing out alleged wasteful spending and corruption. This could see sectors closely tied to the government struggling, such as the aerospace and defense industry. This sector is also under threat as President Trump took an anti-war stance during his prior term and has sought peace between Russia and Ukraine during his current term.
On the flipside of that, Europe has revealed plans to modernize its military to make up for the U.S.’s growing disinterest in the conflict between Russia and Ukraine. This could see the aerospace and defense industry blossom under overseas orders. Howmet Aerospace (HWM) and Transdigm (TDG) are two companies investors might consider taking stakes in with their Strong Buy ratings.
