Labor picture remains mixed, as layoffs increase despite more jobs being added

Despite better-than-expected GDP numbers to close out the year, recent job reports point
to a spike in layoffs, with numbers trending their highest for January since the Great
Recession of 2009. Outplacement firm Challenger, Gray and Christmas reported that U.S.
employers announced 108,435 layoffs for the month of January, an increase of 118% from
one year ago, and a 205% jump from December 2025.
At the same time, companies have announced just 5,306 new hires, also the lowest for
January since 2009.
“Generally, we see a high number of job cuts in the first quarter, but this is a high total for
January,” said Andy Challenger, workplace expert and chief revenue officer for the firm. “It

means most of these plans were set at the end of 2025, signaling employers are less-than-
optimistic about the outlook for 2026.”

Initial jobless claims for the week ending January 31 totaled a seasonally adjusted 231,000,
the highest since early December, however the massive winter storms that hit large parts of
the country may have something to do with those increases.

No doubt, the high-profile layoffs announced by Amazon, UPS and Dow have stoked fears
of a weakening labor market. However, Amazon’s cuts were largely corporate and
administrative positions, to eliminate bloat with a more streamlined and flexible structure,
while the UPS cuts are in part related to their ‘wind-down’ of Amazon deliveries and
another round of buyouts for full-time drivers, while closing operations at 93 buildings. Dow
Chemical is shifting to more automation and artificial intelligence, resulting in 4,500 job
cuts.
Additionally, planned hiring was down 13% from last January and off 49% from December.
While questions exist as to whether data from Challenger is reflective of official statistics,
filings with the Labor Department in January under Worker Adjustment and Retraining
Notification indicate more than 100 companies have announced significant layoffs for the
month of January.

In a separate report issued last week, the Bureau of Labor Statistics reported that job
openings fell in December to 6.54 million, a drop of 386,000 monthly and down more than
900,000 from the October level.

Despite the report published by Challenger, the Labor Department presented a somewhat
different picture of the jobs market, stating that unemployment fell to 4.3% last month, and
that U.S. employers added a surprising 130,000 jobs in January above economists’
expectations, although revisions to earlier reports illustrate that payrolls were reduced by
hundreds of thousands last year. The revisions lowered the number of jobs created last
year to 181,000, the weakest since 2020 during the peak of the pandemic.
The fear remains that, despite solid growth of the economy overall, the job market remains
relatively sluggish, indicating a ‘jobless’recovery may be underway.
According to the labor department, health care accounted for 60% of the job increases last
month, while factories added more than 5,000 jobs, snapping their previous 12-month
losing streak. Average hourly wages rose 0.4% from December to January.
The weak hiring trend also reflects high interest rates, the purging of federal jobs and
President Trump’s erratic trade policies, leaving companies unsure about hiring.

As for the economy’s performance overall, from July to September, the country’s Gross
Domestic Product—its output of goods and services—grew at a better than anticipated
rate of 4.4%, its fastest pace in two years. Consumer spending remained strong, while
exports continued to rise compared to shrinking imports.
Questions remain as to whether job growth and spending will increase as Trump’s tax cuts
settle in, or if GDP ultimately revises itself, or if automation and AI advancements lead to a
period of jobless economic growth.

Last week’s BLS report included the government’s annual benchmark revisions meant to
more accurately illustrate job numbers that employers report to government agencies. The
revisions indicated lowering of total non-farm employment ending March 2025 by 898,000
jobs, indicating weaker job growth than was previously reported.
While the unemployment rate has looked better than the hiring numbers, some of that can

be attributed to President Trump’s immigration crackdown, reducing the number of foreign-
born people competing for work.

Thus, the number of new jobs that need to be created to keep the unemployment rate from
rising—the so-called ‘breakeven point’—has dropped. In 2023, with immigrants pouring

into the country, that number was, according to sources, as high as 250,000. Now,
research from the Brookings Institution has the same number as low as 20,000.
The combination of low unemployment and weak hiring could indicate greater job security
for those already employed. But for people looking for a job, particularly younger workers
facing greater automation and AI advancement across numerous industries, the prospects
remain challenging.