Early promises that the Department of Government Efficiency would achieve $2 trillion in cost cuts may prove too good to be true.
Musk is backing off his $2 trillion government cut from the U.S. federal budget. Instead, Musk said in an interview shared on X that $2 trillion is a best-case scenario. The billionaire believes that $1 trillion in cost cuts is more realistic. After Trump won the election, defense contractor stocks like L3Harris (LHX), Lockheed Martin (LMT), RTX (RTX), and Northrop Grumman (NOC) traded lower. Their stock prices peaked in October and are trending lower.
Kratos Defense (KTOS) is a notable defense firm whose uptrend is intact.
For DOGE to succeed, the government requires cutting Social Security, defense, veterans’ benefits, interest payments on debt, and health care costs. In FY 2024, those cost the government $5.3 trillion.
Americans are already getting ready for the lower government spending. Markets are pricing food stocks lower. Household and personal product firms like Proctor & Gamble (PG) erased its Nov – Dec. 2024 rally. Johnson & Johson (JNJ) shares peaked earlier, in September 2024 at $168.85. The stock closed at a 52-week low on Jan. 7, 2025.
Restaurant stocks are also lower. Chipotle (CMG) and McDonald’s (MCD) pulled back after the U.S. elections.
