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The Trump administration’s trade policies and approach to government downsizing fueled the highest number of announced layoffs since the Great Recession.
U.S.-based employers said they would lay off more than 172,000 people last month, according to a new report from executive outplacement firm Challenger, Gray, & Christmas. That’s a 103% increase compared to a year ago and a 245% increase from a month earlier.
The firm noted that employers have announced 221,812 job cuts, the highest year-to-date total since 2009, when 428,099 cuts were planned. The economic crisis ended in June 2009. Almost 167,000 job cuts were announced across January and February of last year.
February’s layoffs marked the highest number announced monthly since July 2020, a few months after the onset of the COVID-19 pandemic. This was also the 12th highest monthly total in the more than 30 years Challenger has been tracking layoffs.
“Private companies announced plans to shed thousands of jobs last month, particularly in Retail and Technology,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas. “With the impact of the Department of Government Efficiency actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies, job cuts soared in February.”
The underlying reason for the layoffs is President Donald Trump’s tariffs, which have already sparked a trade war with China and Canada, with Mexico set to retaliate as soon as Sunday. Major trade associations, companies, and experts have warned that both American consumers and businesses will be hurt by the tariffs, which the head of New York’s Federal Reserve Bank has said could lead to higher inflation.
Another major contributor is Elon Musk’s Department of Government Efficiency (DOGE), which has been masterminding mass layoffs at federal agencies. Cuts have already hit the National Oceanic and Atmospheric Administration, the U.S. Agency for International Development, and the Consumer Financial Protection Bureau, among others.
The government laid off 62,530 workers across at least 17 agencies through February, according to Challenger, compared to just 151 cuts a year earlier. That’s a 41,311% increase. The downstream impact of DOGE also led to cuts at non-profit organizations and some contractors.
The Internal Revenue Service (IRS) and the Department of Veterans Affairs (VA) are among the agencies currently drafting plans for additional layoffs. The IRS may slash as much as half of the 90,000 workers it employs, as well as more than 80,000 workers in the VA, The Associated Press reports.
A federal judge has ordered the Office of Personnel Management to rescind directives for mass layoffs at more than 24 agencies, while a U.S. board has ordered the Department of Agriculture to temporarily reinstate thousands of laid-off workers. Although that’s given those people their jobs back, it’s possible that some employees and their colleagues may make a voluntary departure anyway.
“When mass layoffs occur, it often leaves remaining staff feeling uneasy and uncertain. The likelihood that many more workers leave voluntarily is high,” Challenger said in a statement.
Mass layoffs also hit retailers, who announced 38,956 job cut plans in February, bringing the year-to-date total to 45,375. That’s a 572% increase compared to layoffs announced during January and February 2024.
Major retailers, including Best Buy (BBY+3.67%) and Target (TGT-2.60%), have warned that they may be forced to raise prices to cover some of the cost of the burgeoning trade war. Firms like Abercrombie & Fitch (ANF-4.41%) and Macy’s (M-0.83%) have also factored tariffs into more conservative guidance, while Walmart (WMT-0.77%) — the largest U.S. retailer — has said it won’t be immune to the duties’ effects.
Challenger’s report comes just a day after ADP (ADP-2.91%) said private companies added just 77,000 new workers in February, compared to 186,000 in January and the 148,000 expected by Wall Street. It’s the smallest increase since July.
“Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” Nela Richardson, ADP’s chief economist, said in a statement. “Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.”
Challenger reports that companies’ hiring plans grew to 34,580 last month, the highest number for February since 2022. So far, companies plan to hire 40,669 workers this year, an increase of 159% compared to 2024. The entertainment and leisure sector is behind the bulk of the hiring plans.