Accenture’s DOGE problem sends shares sliding

Accenture is the worst-performing S&P 500 stock in early trading, down 7% even after the consultancy reported quarterly results that were largely better than expected. The DOGE-shaped fly in the ointment: management warned that the Trump administration’s attempts to curb spending are weighing on its sales outlook.

Here’s CEO Julie Sweet from a conference call with analysts:

“As you know, the new administration has a clear goal to run the federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue. In addition, recently, the General Service Administration has instructed all federal agencies to review their contracts with the top 10 highest-paid consulting firms contracting with the US government, which includes Accenture Federal Services.”

It’s a relatively basic accounting identity that the government’s deficit spending has to end up somewhere else. Either US households are getting more money, US corporations are booking bigger profits, or those greenbacks are going to the rest of the world.

Postpandemic outsized profit growth was, in narrative terms, a tale of base effects and “revenge” spending, but in practical terms, it’s the story of the flow of funds from the government’s debt issuance to household stimmies to Corporate America’s bottom line.

What Accenture is warning of now is just a micro example of this dynamic running in reverse.