Kalshi betting right now is for 300K reduction in force for the Federal government (h/t Torsten Slok):
Figure 1: Nonfarm payroll employment (bold black), SPF forecast (light blue), implied end-2025 with Kalshi bet of 2/23 (green square), assuming 2 contractors for each Federal worker per Slok (red square), all in 000’s. Source: BLS via FRED, Philadelphia Fed, Kalshi (2/23/2025), T.Slok, and author’s calculations.
Personally, I don’t worry so much about the macro impact of fewer workers as much as the disruption and uncertainty engendered (including when the planes start falling out of the sky…)
Figure 2: EPU (blue), Trade Policy Uncertainty (brown). Source: policyuncertainty.com.
According to Caldara et al. (JME, 2020), a rise in Trade Policy Uncertainty (TPU) equal to that in the 2018 trade war decreases investment by 1.5%. Well, from February to July 2018, TPU rose by 189. From October 2024 to January 2025, TPU has risen by … 194.
Add TPU, cutting jobs, erratically declared and capriciously implemented tariffs, and mass deportations, well, then one can worry about the macro outlook.
mass deportations?? Biden got rid of more per month at present. Just more incompetence
Slowing economic growth and raising prices – stagflation.
Since WWII – since forever – trade policy and security policy have been linked. The felon-in-chief is simultaneously undercutting trade and security ties with our allies. Less security and less prosperity for all! That’s a hell of a legacy.
Ungated: https://www.federalreserve.gov/econres/ifdp/files/ifdp1256.pdf
Hey! Glad to see you’ve avoided the 403 monster.
How’s life?