Investing.com -- DOGE has been spit on, cursed at, and kicked in the shins the past few weeks... but trust us, this is for your own good.
While the stock market acts like a brat child that doesn’t want to take a bath, DOGE is doing the dirty work.
In a recent note to clients, BofA Securities strategist Jared Woodard illustrated the “unsustainable” government support that has been provided to the U.S economy under the Biden administration, highlighting the great need for DOGE. Woodard notes:
- one year ago, 85% of US job market growth was in government and sectors dependent on government
- in 2024, one third of GDP came from government spending, a record high excluding periods of war or crisis
- this was financed by 6-7% budget deficits, another unwelcome peacetime record.
“The global handoff from big government to the free market may prove slippery, but it seems necessary given large deficits and bloated debt burdens,” Woodard said.
On trade, the strategist highlights that the U.S. has lower average tariff rates than nearly all other G20 countries (except for two) and that many countries use hidden barriers, such as quotas, price controls, labeling requirements, and testing rules, to make market access more expensive.
Further, he highlights that the public-to-private shift is happening worldwide. In Japan, corporate reforms are unlocking ¥206tn (33% of GDP) in cash, fueling a spring stock rally. In Germany, Chancellor Merz plans to lift the debt brake for €1tn in defense and infrastructure spending. In China, pro-market signals may boost domestic consumption. In Argentina, fiscal cuts (5% of GDP) have balanced the budget, cut inflation by 25ppt, and lifted stocks.
Overall, Woodard said that while it will take some time for private sector job growth to accelerate and government workers to resettle, “the risks from the unsustainable status quo of debtfinanced, tepid, and narrow economic growth are severe.”