‘The Big Short’ investor who predicted the 2008 crash warns the market is ‘underestimating’ the economic impact of DOGE’s mass spending cuts
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Markets have not yet factored in the impact of mass cuts in government spending, ‘The Big Short’ investor Danny Moses said. He told Fortune the Department of Government Efficiency’s cuts have jeopardized private contractors, small businesses, and the labor market. “It’s not as simple as just, ‘We think there’s fraud, let’s cut waste, let’s cut expenses,’” he said.
Investor Danny Moses, best known for his oracular bet against mortgage-backed debt before the 2008 stock market crash, is warning of another economic red flag.
The founder of Moses Ventures made famous by the book-turned-movie “The Big Short” cautioned the market has not yet accounted for the negative economic impact of the mass cuts to government jobs carried out by the Elon Musk-championed Department of Government Efficiency.
“I think we are underestimating the impact to the economy of the cuts we’re making at the federal government, and what that might mean [for] the knock-on effects into the economy,” Moses said in a CNBC “Power Lunch” interview on Thursday. “We’re hurting the revenue side of the equation.”
“I think we are being overly optimistic [as to] how this is going to play out,” he added.
President Donald Trump’s administration has fired more than 24,000 federal workers, according to court documents, many of whom expect difficulty finding private sector jobs due to the specificity of their expertise. An additional 75,000 employees took a deferred resignation opportunity, which allowed them to receive pay and benefits through September. DOGE’s Wall of Receipts claims to have eliminated $115 billion in government spending—though the veracity of its alleged savings are under fire from experts.
The administration’s whipsaw on tariffs has sown further uncertainty in the markets, leading companies to reassess their plans. Meanwhile, Federal Reserve chair Jerome Powell has left interest rates untouched while the policy plays out.
Moses argued investors are already beginning to see disruptions in consumer confidence—which last month saw its steepest drop in four years—and will continue to hear similar trends in upcoming earnings calls. These slowdowns have yet to be priced into the market, he said.
“It’s not as simple as just, ‘We think there’s fraud, let’s cut waste, let’s cut expenses,’” Moses told Fortune. “And it’s not just about the federal workers, and it’s not just about the expenses out of those programs. It’s about the contracts with the private sector.”
The tell-tale signs of the weakening economy will be seen in small businesses and “private contractors that are doing legitimate work services that are now being forced to make decisions on their business,” Moses said.
