The incoming administration will face stark fiscal arithmetic: Most federal dollars go to direct transfers to Americans, disproportionately located in the very places that propelled Trump back to the White House.

Why it matters: If the Elon Musk/Vivek Ramaswany-led Department of Government Efficiency is to achieve anything approaching the $2 trillion in annual cost savings they've floated, slashing bureaucrats from the federal payroll or payments to well-heeled contractors wouldn't be enough.

• Rather, it would require cuts to programs on which the counties that backed Trump heavily depend.
• Big-ticket transfer programs operated by the federal government include Social Security ($1.3 trillion in outlays in 2023), Medicare ($1 trillion), Medicaid ($616 billion), income security programs like unemployment benefits and food stamps ($448 billion), and federal employee pensions ($197 billion).
• Mandatory programs like those added up to 69% of non-interest federal spending in 2023. Their combined $3.75 trillion in spending was more than twice as much as defense and non-defense discretionary spending combined ($1.7 trillion).

By the numbers: Researchers at the Economic Innovation Group analyzed county-level data on how much personal income was driven by those federal transfer programs in 2022, as opposed to income earned from wages, investments, and the like.

• In the counties most reliant on transfer payments — where they account for more than 25% of all income — Trump won 63% of the vote.
• In those counties least reliant on transfers, accounting for 15% or less of total income, Vice President Harris won 56% of the vote, according to analysis by Sarah Eckhardt, Connor O'Brien and Ben Glasner of EIG.

Zoom in: There are multiple types of counties with high rates of transfer payments. Some, for example, are prosperous places that are popular among retirees receiving Social Security and Medicare.

• Others are more economically distressed, resulting in a greater reliance on Medicaid and income support benefits. In some of these communities, federal transfers account for a massive share of all income.
• Owsley County in Kentucky led the nation with 63% of personal income from transfer payments, and it topped 50% in 13 other Kentucky counties. Trump carried the state by almost 31 points.

Of note: The administrative cost of these programs tends to be a small fraction of the money spent; the overwhelming cost is the benefits themselves. For Social Security, for example, administrative overhead is about 0.5% of total spending.

• That added up to $7.2 billion in 2023 — meaning even if you replaced federal employees with AI customer service bots, the savings would be trivial in the scheme of the whole federal budget.

The bottom line: "The primary drivers of greater transfer spending are an aging society and rising healthcare costs, not wasteful programs or a radically more generous welfare state," EIG president John Lettieri tells Axios.

• "Therefore, if we want to reverse this trend, we need the nation as a whole to look more like the places that are relatively less dependent on transfers today — areas with strong population and economic growth alike." 

Hurricanes and strikes made it difficult to gauge how the labor market fared in October. The state-by-state employment data offers more clues, and they're not positive.

Why it matters: Granular data suggests hiring did slow last month, even when excluding effects from Hurricane Helene, Hurricane Milton and the Boeing strike.

Between the lines: The data points to a "fundamental slowdown" in October, Sam Tombs, an economist at Pantheon Macroeconomics, wrote in a note yesterday.

• Tombs estimated the economy might have added just 91,000 jobs last month — stripping out effects from the Boeing strike and the drop in Florida's payrolls — among the areas hit hardest by the hurricane.
• A separate estimate by ING shows the economy likely added roughly 121,000 without hurricane and striking effects.

What they're saying: "The October jobs report was an unambiguously weak report," ING economist James Knightley wrote in a note — pointing to downward revisions to jobs growth in August and September unrelated to any hurricanes or strikes.

• About 29 states saw job growth slow in October, and "we certainly didn't have 29 states impacted by the hurricane and strikes," Knightley added.