DOGE cuts ‘act like a corrosive’ on labor stats revisions and U.S. economy, warns Moody’s Mark Zandi

DOGE cuts ‘act a corrosive’ on labor stats revisions and U.S. economy, warns Moody’s Mark ZandiBy Sheryl EstradaBy Sheryl EstradaSenior Writer and author of CFO DailySheryl EstradaSenior Writer and author of CFO DailySheryl Estrada is a senior writer at Fortune, where she covers the corporate finance industry, Wall Street, and corporate leadership

She also CFO Daily.SEE FULL BIO Mark Zandi, chief economist of Moody's AnalyticsElon Musk’s DOGE may have much of its work in the federal bureaucracy, but the trickle-down effect from Musk’s chainsaw contributed to the downward employment revisions that drew President Trump’s ire and led to the now-infamous firing of the labor statistics commissioner

The DOGE’s cuts to government jobs are contributing to downward employment revisions because the government typically reports its payrolls to the Bureau of Labor Statistics (BLS) late, and increasingly later reports often lead to bigger revisions, Mark Zandi, chief economist at Moody’s Analytics, told Fortune

He noted that the government does not report in time for the initial employment estimate vided by the BLS. “This didn’t matter much when government employment was stable, but now that government jobs are declining, the cuts are being picked up in the revisions,” Zandi said

He added that DOGE’s impact also extends to the statistical agencies themselves, including the BLS, where staff reductions slow the cessing of employment records and lead to larger subsequent revisions

Amid intensifying scrutiny over deteriorating employment figures, President Trump on Aug. 1 ordered the firing of Erika McEntarfer, the commissioner of the BLS

Regarding the economy, Pantheon Macroeconomics found that DOGE cuts knocked apximately 0.3 percentage points from U.S

Zandi believes sustained DOGE cuts increase the odds of a recession. “The DOGE cuts ly act more a corrosive on the economy than a cliff event, resulting in recession,” he said

Meanwhile, policies higher tariffs or restrictive immigration rules would ly have a much more sudden and damaging impact on the economy, potentially causing a recession directly, Zandi said

Beyond the numbers, Zandi flagged deeper risks stemming from DOGE’s workforce reductions

He warned that slashing jobs at statistical agencies is already degrading the quality of federal data—a symptom of wider unint consequences for government services. “Government workers have important jobs that are critical to viding important services to taxpayers,” Zandi said. “If jobs are cut and those services aren’t vided or aren’t vided in a timely and competent way, there can be significant negative fallout.” He cited examples ranging from weather reporting vital to disaster response to food-safety inspections that safeguard the national food supply.Introducing the 2025 Fortune 500, the definitive ranking of the biggest companies in America

Explore this year's list.