In February, U.S. employers announced 172,017 job cuts, marking a 245% increase from January and the highest monthly total since July 2020, according to data from Challenger, Gray & Christmas.
The federal government accounted for 62,242 of these layoffs across 17 agencies, a staggering 41,311% increase compared to the same period last year. This surge is largely attributed to the Department of Government Efficiency (DOGE), led by Elon Musk, which aims to reduce the federal workforce and cancel certain government contracts.
Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, commented on the situation: “With the impact of the Department of Government Efficiency [DOGE] actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies, job cuts soared in February.”
The retail sector also experienced significant layoffs, with 38,956 job cuts in February, contributing to a 572% increase in retail layoffs compared to the first two months of 2024. The technology sector announced 14,554 job cuts in February, totaling 22,042 for the year, though this represents a 22% decrease from the same period last year.
Despite these layoffs, the unemployment rate remains at 4.0%. However, economists caution that the cumulative effects of federal job cuts and broader economic policies, including tariffs and reduced federal spending, could lead to further economic slowdowns and increased uncertainty in business hiring practices.
The Department of Government Efficiency’s actions have raised concerns about potential disruptions in government services and job losses among companies contracting with the federal government. While some economists believe these layoffs may not significantly affect the overall labor market, the broader implications remain uncertain.
As the labor market faces these challenges, upcoming reports on nonfarm payrolls and employment data will be closely watched to assess the full impact of these developments on the U.S. economy.