Evelyn Reynolds

Black American workers made up just under 20% of the federal workforce in 2021, higher than the group’s share of employment as a whole, according to a study by the U.S. Government Accountability Office.
Other groups with relatively high representation in the federal workforce include Native Americans and people with disabilities.
The recent cuts have made some job-seekers rethink their career paths, said Janine Wiggins, owner of Resumes by Neen, an Alabama-based job search coaching business focused on federal workers.

A person displays a sign as labor union activists rally in support of federal workers during a protest, with the U.S. Capitol in the background on Capitol Hill in Washington, U.S., Feb. 11, 2025. 
Craig Hudson | Reuters

The sudden cuts to the federal workforce under President Donald Trump will likely throw a curveball into the retirement plans of many Americans, including those from typically disadvantaged backgrounds like Black Americans.
The federal government is often seen as a stable employer with generous benefits, including a defined benefit retirement package that has become rare in corporate America.

But the recent cuts, such as the widespread culling of employees with probationary status, have made some job-seekers rethink their career paths, said Janine Wiggins, owner of Resumes by Neen, an Alabama-based job search coaching business focused on federal workers.
“They’re growing distrust toward federal jobs, just because of the mass layoffs and all of the different executive orders that have been going out. There’s a lot of volatility now. … Before, I would get a lot of clients that want to work for the government because they see it as somewhere where they can stay long-term and retire,” Wiggins said.

The full impact of the jobs cuts is to be determined. However, there’s a chance that they could impact certain minority groups at a relatively high rate, given the demographics of the federal workforce.
According to a study by the U.S. Government Accountability Office, Black American workers made up just under 20% of the federal workforce in 2021. Recent data from the Bureau of Labor Statistics puts the Black American share of the civilian workforce at roughly 13%. Other groups with relatively higher representation in the federal workforce include Native Americans and people with disabilities.
One of those current employees is Katrina Ayers, a 36-year old African American mother of three in Mobile, Alabama, who works as a technician for the National Guard.

“What attracted me to was of course job security and the health insurance. That was the biggest thing. It was something that was stable,” Ayers said. She has been a federal employee for nine years.
Ayers said that she has private retirement savings, including a Roth IRA, in addition to her federal benefits. Still, she says she knows some federal workers rely solely on the government plans.

Federal retirement benefits

The retirement package for most federal workers consists of three main programs: Social Security, a 401(k)-like Thrift Savings Plan, and an annuity program called the Basic Benefit Plan. The minimum retirement age for the annuity plan is 57 years old for workers born in 1970 or later. There are options of deferred or early retirements for workers who meet certain thresholds.
That basic annuity is calculated using years of service and the highest average pay during three consecutive years of service, so even employees who are eligible for the program could end up with a lower-than-expected benefit if they are pushed out. Employees who are separated from their federal jobs before they are eligible for retirement can receive a lump sum of their retirement contributions.
The 401(k)-style Thrift Savings Plan is better than the average 401(k) plan found in the private sector, said J. Mark Iwry, who is currently a nonresident senior fellow at the Brookings Institution and a visiting scholar at the Wharton School. He previously served as senior advisor to the secretary of the Treasury from 2009 to 2017.

The defined benefit pension plan for many federal workers provides a somewhat lower level of benefits than some of the comparable private sector plans that are still in operation, Iwry said. However, the federal plan does have the rare perk of being largely adjusted for inflation.
Of course, the impact on retirement savings can also depend on how long it takes for workers to find a new job, and if they need to liquidate some of their assets in the meantime.
“You may end up having a need to tap your retirement savings that you wouldn’t if you didn’t have to change jobs,” said Craig Copeland, director of wealth benefits research with the Employee Benefit Research Institute.
Some workers in lower-income communities or with lower family wealth may also have more people to support, putting additional strain on their finances. This could be a reason that, at higher levels of income, there’s some evidence that Black workers save less than their white counterparts, Copeland said.
“The wealthier individuals that are Black or Hispanic felt that they had more of a responsibility to care for other loved ones than save for their retirement. So that limited somewhat of how much they saved,” Copeland said.
In general, the wealth gap between Black and white savers has been widening due to an array of factors, including Black households having less exposure to the stock market, existing barriers to Black homeownership and the undervaluation of homes in communities of color. This disparity in wealth also continues to grow as people age.

What’s next

The exact extent of the job cuts among federal workers is unclear. Several legal challenges have already been filed against Elon Musk’s Department of Government Efficiency, which has been pushing for some of the job cuts. Tech executive Musk took a similar cost-cutting approach when he bought the company formerly known as Twitter.
The government has also done some backtracking, such as the U.S. Food and Drug Administration re-hiring some of medical device division staff, suggesting that some of the eliminated roles may need to be filled again in the near future.
“People make the country run. So you need people in place, and to lay off all these federal workers, I’m just not understanding the rhyme and reason why, because I just feel like it’s going to be a domino effect,” Ayers said.
For her part, Ayers said that she has a backup plan if she needs to transition full-time into the private sector but isn’t ready to give up on her career with the federal government just yet.
“I’m going to still apply for jobs because I still believe in career progression, and I would like to stay on in the federal sector since I’ve invested so many years,” Ayers said. More

The 10-year Treasury yield passed below that of the 3-month note in Wednesday trading. In market lingo, that’s known as an “inverted yield curve,” and it’s had a sterling prediction record.
While there’s no certainty that growth will turn negative this time around, investors worry that expected growth from an ambitious agenda under President Donald Trump may not happen.
Yield curve inversions have had a strong but not perfect forecasting history. In fact, the previous inversion happened in October 2022, and there’s still been no recession, 2½ years later.

Eggs are displayed for sale in a Manhattan grocery store on Feb. 25, 2025 in New York City.
Spencer Platt | Getty Images

An ominous measure that the Federal Reserve considers a near surefire recession signal again has reared its head in the bond market.
The 10-year Treasury yield passed below that of the 3-month note in trading Wednesday. In market lingo, that’s known as an “inverted yield curve,” and it’s had a sterling prediction record over a 12- to 18-month timeframe for downturns going back decades.

In fact, the New York Fed considers it such a reliable indicator that it offers monthly updates on the relationship along with percentage odds on a recession occurring over the next 12 months.
At the end of January, when the 10-year yield was about 0.31 percentage point clear of the 3-month, the probability was just 23%. However, that is almost certain to change as the relationship has shifted dramatically in February. The reason the move is considered a recession indicator is the expectation that the Fed will cut short-term rates in response to an economic retreat in the future.

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10-year 3-month curve

“This is what one would expect if investors are adopting a much more risk-averse attitude set of behavior due to a growth scare, which one periodically sees late in business cycles,” said Joseph Brusuelas, chief economist at RSM. “It’s not clear yet whether it’s more noise or it’s a signal that we’re going to see a more pronounced slowdown in economic activity.”
Though markets more closely follow the relationship between the 10- and 2-year notes, the Fed prefers measuring against the 3-month as it is more sensitive to movements in the central bank’s federal funds rate. The 10-year/2-year spread has held modestly positive, though it also has flattened considerably in recent weeks.

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10-year 2-year yield curve

To be sure, yield curve inversions have had a strong but not perfect forecasting history. In fact, the previous inversion happened in October 2022, and there’s still been no recession 2½ years later.

So while there’s no certainty that growth will turn negative this time around, investors worry that expected growth from an ambitious agenda under President Donald Trump may not happen.
Economic obstacles arising
The 10-year yield soared following the Nov. 5, 2024, presidential election, building on gains that began when Trump moved higher in the polls in September and peaking about a week before the Jan. 20 inauguration. That would normally be a telltale sign of investors expecting more growth, though some market pros saw it also as an expression of worries over inflation and the extra yield investors were demanding from government paper amid a mounting debt and deficit issue for the U.S.
Since Trump took office last month, yields have tumbled. The 10-year has fallen about 32 basis points, or 0.32 percentage point, since the inauguration as investors worry that Trump’s tariff-focused trade agenda could spike inflation and slow growth. The benchmark yield is now essentially unchanged from Election Day.

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10-year yield

“There are quite a number of little potholes in the roadway that we really need to navigate around,” said Tom Porcelli, chief U.S. economist at PGIM Fixed Income. “What’s happening is all the uncertainty around the tariffs in particular is putting a very high-powered magnifying glass over all those cracks. People are starting to perk up and pay attention to this now.”
Recent sentiment surveys have reflected consumer and investor angst over prospects that growth could slow as inflation perks up just as it appeared to be easing.
In the University of Michigan’s monthly survey, respondents put their longer-term view on inflation, over the next five years, at its highest level since 1995. On Tuesday, the Conference Board reported that its forward-looking expectations index had sunk back down to levels consistent with recession in February.
Still, most of the “hard” economic data such as consumer and labor market indicators have held positive even in the face of downbeat sentiment.

“We are not looking for a recession,” Porcelli said. “We don’t expect one. We do, however, expect softer economic activity in the coming year.”
Markets are coming around to the same view of weaker activity as well.
In response, traders are now pricing in at least a half percentage point of interest rate cuts this year from the Fed, an implication that the central bank will ease as growth slows, according to the CME Group’s FedWatch measure of futures prices. The bond market smells “recession in the air,” said Chris Rupkey, chief economist at FWDBONDS.
However, Rupkey also said he’s not sure whether a recession will actually happen, since the labor market isn’t yet signaling that one is coming.
The yield curve inversion “is a pure play on the economy being not as strong as people thought it was going to be at the beginning of the Trump administration,” he said. “Whether or not we’re forecasting a full-blown recession, I don’t know. You need job losses for a recession, so we’re missing one key point of the data.”

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Friedrich Merz, the Christian Democratic Union’s candidate for chancellor, has not shied away from blasting Olaf Scholz’s economic policies and linking them to the lackluster state of Europe’s biggest economy.
But experts say a Merz-led government may also not give the German economy the boost it needs.
The German economy contracted in both 2023 and 2024.

Production at the VW plant in Emden.
Sina Schuldt | Picture Alliance | Getty Images

The struggling German economy has been a major talking point among critics of Chancellor Olaf Scholz’ government during the latest election campaign — but analysts warn a new leadership might not turn these tides.
As voters prepare to head to the polls, it is now all but certain that Germany will soon have a new chancellor. The Christian Democratic Union’s Friedrich Merz is the firm favorite.

Merz has not shied away from blasting Scholz’s economic policies and from linking them to the lackluster state of Europe’s largest economy. He argues that a government under his leadership would give the economy the boost it needs.
Experts speaking to CNBC were less sure.
“There is a high risk that Germany will get a refurbished economic model after the elections, but not a brand new model that makes the competition jealous,” Carsten Brzeski, global head of macro at ING, told CNBC.

The CDU/CSU economic agenda

The CDU, which on a federal level ties up with regional sister party the Christian Social Union, is running on a “typical economic conservative program,” Brzeski said.
It includes income and corporate tax cuts, fewer subsidies and less bureaucracy, changes to social benefits, deregulation, support for innovation, start-ups and artificial intelligence and boosting investment among other policies, according to CDU/CSU campaigners.

“The weak parts of the positions are that the CDU/CSU is not very precise on how it wants to increase investments in infrastructure, digitalization and education. The intention is there, but the details are not,” Brzeski said, noting that the union appears to be aiming to revive Germany’s economic model without fully overhauling it.
“It is still a reform program which pretends that change can happen without pain,” he said.

Geraldine Dany-Knedlik, head of forecasting at research institute DIW Berlin, noted that the CDU is also looking to reach gross domestic product growth of around 2% again through its fiscal and economic program called “Agenda 2030.”
But reaching such levels of economic expansion in Germany “seems unrealistic,” not just temporarily, but also in the long run, she told CNBC.
Germany’s GDP declined in both 2023 and 2024. Recent quarterly growth readings have also been teetering on the verge of a technical recession, which has so far been narrowly avoided. The German economy shrank by 0.2% in the fourth quarter, compared with the previous three-month stretch, according to the latest reading.
Europe’s largest economy faces pressure in key industries like the auto sector, issues with infrastructure like the country’s rail network and a housebuilding crisis.
Dany-Knedlik also flagged the so-called debt brake, a long-standing fiscal rule that is enshrined in Germany’s constitution, which limits the size of the structural budget deficit and how much debt the government can take on.
Whether or not the clause should be overhauled has been a big part of the fiscal debate ahead of the election. While the CDU ideally does not want to change the debt brake, Merz has said that he may be open to some reform.
“To increase growth prospects substantially without increasing debt also seems rather unlikely,” DIW’s Dany-Knedlik said, adding that, if public investments were to rise within the limits of the debt brake, significant tax increases would be unavoidable.
“Taking into account that a 2 Percent growth target is to be reached within a 4 year legislation period, the Agenda 2030 in combination with conservatives attitude towards the debt break to me reads more of a wish list than a straight forward economic growth program,” she said.

Franziska Palmas, senior Europe economist at Capital Economics, sees some benefits to the plans of the CDU-CSU union, saying they would likely “be positive” for the economy, but warning that the resulting boost would be small.
“Tax cuts would support consumer spending and private investment, but weak sentiment means consumers may save a significant share of their additional after-tax income and firms may be reluctant to invest,” she told CNBC.  
Palmas nevertheless pointed out that not everyone would come away a winner from the new policies. Income tax cuts would benefit middle- and higher-income households more than those with a lower income, who would also be affected by potential reductions of social benefits.

Coalition talks ahead

Following the Sunday election, the CDU/CSU will almost certainly be left to find a coalition partner to form a majority government, with the Social Democratic Party or the Green party emerging as the likeliest candidates.

The parties will need to broker a coalition agreement outlining their joint goals, including on the economy — which could prove to be a difficult undertaking, Capital Economics’ Palmas said.
“The CDU and the SPD and Greens have significantly different economic policy positions,” she said, pointing to discrepancies over taxes and regulation. While the CDU/CSU want to reduce both items, the SPD and Greens seek to raise taxes and oppose deregulation in at least some areas, Palmas explained.
The group is nevertheless likely to hold the power in any potential negotiations as it will likely have their choice between partnering with the SPD or Greens.
“Accordingly, we suspect that the coalition agreement will include most of the CDU’s main economic proposals,” she said. More