Job cuts surge on the "DOGE" impact
The Sandbox Daily (3.6.2025)
Welcome, Sandbox friends.
Today’s Daily discusses:
job cuts surge on DOGE actions
Let’s dig in.
Blake
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Quote of the day
“Your talent is God's gift to you. What you do with it is your gift back to God.”
- Leo F. Buscaglia, Ph.D. in Living, Loving, and Learning
Job cuts surge on DOGE actions
In a sign that policies from the new White House Administration are starting to hit the labor market, Challenger layoff announcements spiked 245% m/m in February to 172,017, more than double what they were a year ago and the highest monthly total since July 2020 (262,649).
The year-to-date total of nearly 222,000 planned job cuts is the highest since 2009, when the economy was still amidst the Great Recession.
The surge was led by the government sector, with 17 different agencies announcing cuts last month.
Challenger said the purging of the federal workforce by DOGE was cited as the main reason for layoffs.
Despite the jump in job cutting plans, initial claims for unemployment insurance have yet to show a meaningful increase.
They actually fell by 21,000 last week to a lower-than-expected 221,000, basically reversing the rise in the previous week.
Initial claims have been range-bound since late 2021, close to their pre-pandemic level and are low by historical norms.
Continuing unemployment claims in the prior week rose 42,000 to 1.897 million, but are also contained longer-term, while the insured jobless rate was unchanged at 1.2%. This is consistent with a continued low unemployment rate in the very near term.
These reports, however, suggest that there is a disruption brewing in the labor market.
Given that the jobs market started 2025 from a near-balanced supply/demand position, weakening economic growth and more layoffs in the months ahead could put upward pressure on the unemployment rate and downward pressure on economic growth.
Such weakness is unlikely to show up in the BLS monthly jobs tomorrow, but is a risk for subsequent months. A significant risk that must be watched closely.
Sources: Challenger, Gray, & Christmas Inc, Bloomberg, Ned Davis Research
That’s all for today.
Blake
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