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Investing.com-- Apollo Global Management (NYSE:APO) has flagged growing downside risks to the U.S. economy and markets, driven by anticipated Department of Government Efficiency (DOGE)-related layoffs and rising policy uncertainty despite robust incoming economic data.
In a research note, Apollo Chief Economist Torsten Slok highlighted concerns over the potential impact of large-scale job cuts in the DOGE sector.
While consensus estimates predict around 300,000 federal job losses, Apollo warns the true figure could approach 1 million when including contractors—given studies indicating two contractors for every federal employee.
“Any increase in layoffs will push jobless claims higher over the coming weeks, and such a rise in the unemployment rate is likely to have consequences for rates, equities, and credit,” the economist wrote.
Additionally, Apollo pointed to persistently high levels of economic policy uncertainty, which have yet to widen credit spreads as expected.
“The question is if persistently elevated policy uncertainty will begin to have a negative impact on capex spending and hiring decisions,” Slok stated.
While the U.S. labor market remains strong, with 160 million employed and 7 million unemployed, Apollo cautioned that rising layoffs and heightened uncertainty could weigh on future economic growth.
The firm emphasized the need for vigilance as near-term downside risks intensify, even as current data remains solid.