DOGE reforms hit the U.S. economy hard: the airline stock market lost $20 billion, Washington fell into unemployment and the housing crisis

After taking office, US President Trump quickly promoted large-scale government spending cuts through the “Government Efficiency Department (DOGE)” in an attempt to reduce the fiscal deficit. However, the policy has caused cascading economic shocks, including a collapse in airline stock prices caused by a 50% decline in government travel demand, soaring unemployment in Washington, D.C., and an ongoing housing crash.

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DOGE cuts in government spending, triggering an aviation crisis

Financial media Kobeissi Letter pointed out that the US aviation industry is experiencing unprecedented turmoil. United Airlines (United Airlines, $UAL ) The CEO said Feb. 19 that business travel demand from government employees has fallen sharply, affecting the company’s government travel revenue, which originally exceeded $1 billion a year.

In addition, Delta Air Lines (Delta Air Lines, $DAL ) also lowered its forecast for the first quarter of 2025 last week, lowering its revenue growth forecast from 8% to 3.5%, margin from 7% to 4.5%, and earnings per share by more than 50%.

American Airlines (American Airlines, $AAL ) A few days ago, it lowered its forecast in tandem, expecting first-quarter losses to widen to $0.60 to $0.80 per share:

Due to weak government-related bookings, we slashed flight capacity in Washington, D.C., which has been one of the most profitable markets.

As the government cut spending, airline stock prices fell. Google Finance data shows that since Trump took office, the shares of the three major airlines have all fallen by more than 20%, and their market value has lost more than $20 billion.

Washington, D.C., is in a dual crisis of jobs and housing

The DOGE policy not only hit the aviation industry, but also plunged Washington, D.C.'s economy into a cold winter. As of mid-February, jobless claims in Washington, D.C., surged 36% in a week, tripling the 2024 average and even surpassing levels during the 2007 financial crisis.

On March 6, Challenger Gray & Christmas data showed that the number of DOGE-related layoffs in 2025 has reached 62,000, an increase of 41,311% over the same period last year.

The housing market has also been hit hard, with house prices plunging 21% since last November, the lowest on record since January 2020. More than 10,000 homes are currently for sale in Washington, D.C., with nearly 5,000 new units added since November.

In February this year, the annual growth rate of housing inventory was as high as 31.6%, far exceeding the level of the 2008 financial crisis, indicating that the housing crisis has reached a tipping point.

Government credit cards are deactivated, further reducing consumption capacity

The impact of DOGE’s policy is not limited to layoffs and travel spending cuts, but also affects the use of government credit cards. On the same day that Delta Air Lines and American Airlines lowered their forecasts, DOGE announced the retirement of more than 200,000 government credit cards, or about 5% of the total number of U.S. government credit cards, and emphasized that further reductions will be made in the future, further curbing the spending power of government employees and exacerbating economic pressures.

At the same time, jobless claims have surged. Unemployment insurance claims increased by nearly 400% annually as of March this year, showing that DOGE cuts have severely impacted the livelihoods of government employees and had a ripple effect on the overall economy.

The U.S. economy is overly dependent on government spending

The Kobeissi Letter warns that the U.S. economy’s dependence on government jobs has reached dangerous levels. With the addition of 2 million government jobs over the past four to five years, it has been the main source of recent job growth in the United States.

U.S. government spending will account for 34% of GDP in 2024, and continued growth over the past few decades shows how reliant the economy is on public-sector funding.

Kobeissi Letter predicts that layoffs in Washington, D.C., will continue to spread in the coming months and may even trigger a ripple effect in global markets:

Even if cuts in government spending are necessary to control the deficit, the impact on the U.S. economy will continue to expand, and the changes observed so far are probably just the beginning.

The cost of DOGE reform emerges

DOGE’s aggressive cuts are reshaping the structure of the U.S. economy, from the evaporation of the value of the airline industry, soaring unemployment and a collapse in the housing market in Washington, D.C., to a sharp decline in consumer spending.

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Although the goal of reducing the fiscal deficit is clear, the impact on economic stability should not be underestimated. As more data emerges, the full impact of DOGE’s policies remains to be seen.

This article DOGE reform hit the U.S. economy hard: the value of the aviation stock market lost $20 billion, Washington fell into unemployment and the housing crisis first appeared in Chain News ABMedia.