WSJ looks at federal layoffs' raising economic uncertainty

The federal government, the nation’s largest employer, is shedding jobs at an unprecedented pace, and the Journal evaluates economic ripple effects. While initial estimates placed layoffs at fewer than 30,000, deferred resignations, firings of probationary employees, and a hiring freeze could push the number as high as 475,000, amounting to a 20 percent cut in federal employment.

At 2.4 million civilian employees (excluding postal workers), the federal workforce makes up about 1.5 percent of total nonfarm jobs. However, government workers tend to earn above-average salaries, and their loss could suppress consumer spending, particularly in regions with a high federal presence, such as the DC metro.

The layoffs also threaten federal contractors, who outnumber direct employees by more than two to one. Rising unemployment claims in Maryland and DC suggest the effects are already being felt. Whether job cuts derail government operations or merely trim excess remains to be seen, but uncertainty is weighing on businesses and consumer sentiment alike.