Danny Moses, the investor known to many readers through The Big Short, warned in March 2025 that federal spending cuts tied to DOGE could ripple beyond government workers and weaken revenue for contractors and other businesses. That was a forecast about possible economic effects—not proof that cuts caused a recession, a market decline or a measurable economy-wide downturn.
What Danny Moses warned about
In a CNBC interview reported by Futurism on March 24, 2025, Moses said: “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.” He added, “I think we’re hurting the revenue side of the equation.”
His concern was that reductions in federal spending could affect more than the employees directly losing jobs. Businesses that sell goods or services to the government could lose work or face uncertainty about future contracts. If those firms cut hiring, payroll or purchases, the effects could reach workers and other businesses, too.
In a March 21, 2025, Fortune report, Moses put the contractor issue this way: “It’s not as simple as just, ‘We think there’s fraud, let’s cut waste, let’s cut expenses,’” adding that “it’s about the contracts with the private sector.” He was arguing that a government decision to reduce or end spending can affect private-sector revenue, not just the federal budget.
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How cuts could reach households and businesses
The mechanism Moses described is a possible chain of effects, not a measured result. A cancelled or reduced federal contract could mean less revenue for a supplier; the supplier might then reduce staff, investment or spending with its own vendors. Separately, federal workers who lose jobs or income could spend less. Those changes could weigh on other businesses and household confidence.
The scale and direction of any overall effect would depend on which spending is reduced, how quickly work ends, whether firms find replacement customers, and whether savings are spent elsewhere. The cited sources do not establish the net causal effect of the cuts on GDP, employment, inflation or financial markets.
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Fortune also quoted Indeed Hiring Lab economist Cory Stahle asking, “Can the labor market absorb these workers?” and answering, “We’re not quite sure if it can.” That was a contemporaneous expression of uncertainty in March 2025, not a later measurement of how displaced workers fared.
What federal contracting figures show—and what they do not
Government Accountability Office (GAO) figures put federal contracting in context, but aggregate annual totals cannot identify the impact of any one cancellation. GAO distinguishes contract commitments from obligations; neither topline alone shows whether a specific contract was terminated, whether work shifted to another contract, or what net savings resulted.
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| Figure | What it measures | Important qualification |
|---|---|---|
| About $759 billion in FY2023 | Federal contract commitments, reported by GAO in June 2024 | About $33 billion above FY2022 after inflation adjustment; this is the scale of commitments, not an estimate of the cuts’ economic multiplier or net effect. |
| About $793 billion in FY2025 | Federal contract commitments, reported by GAO in May 2026 | An inflation-adjusted increase of $17.8 billion from FY2024. The topline does not rule out individual cancellations or show their effects. |
| About $110 billion as of July 7, 2026 | Savings reported by DOGE’s Wall of Receipts across contracts, grants and leases | This is DOGE’s reported total, examined in GAO’s August 2026 review—not a GAO-validated savings figure. |
The FY2025 total shows that federal contract commitments did not simply vanish in aggregate. It does not tell whether spending fell in particular agencies, industries or contracts, or how any change affected the businesses and workers exposed to it.
How much did DOGE actually save?
GAO’s August 6, 2026, review found significant limits in the transparency and support for the Wall of Receipts estimates. GAO reported that DOGE did not use its stated calculation method for the majority of reported contract savings. For 96% of claimed grant savings, the information provided did not allow GAO to verify the method used.
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That finding does not mean every listed saving was necessarily false; it means the reported total should not be presented as independently verified savings. Nor does a reported saving by itself show the economic cost or benefit: a reduction in federal outlays may lower a contractor’s revenue, while the broader consequences depend on what work ends, what replaces it and how any funds are used.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why Moses is associated with the 2008 crash
Moses became widely known through Michael Lewis’s 2010 book The Big Short and its 2015 film adaptation. The reporting behind this story supports the more precise description that he bet against mortgage-backed securities before the 2008 financial crash. Calling him “the guy who predicted the 2008 crash” is shorthand; the available accounts do not establish that he was the sole or uniquely prescient predictor.
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That history explains why his later warning attracts attention, but it does not establish that the warning about federal spending will prove correct. The March 2025 statements are best read as an investor’s concern about a plausible economic transmission channel. The GAO figures and audit add context about contracting and reported savings; they do not determine the eventual causal effect on the economy.
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