The U.S. job market is showing signs of a slowdown as employers continue to trim their workforce amidst persistent inflation and rising interest rates.
According to a recent report from Challenger, Gray & Christmas, American companies announced 90,309 job cuts in March, marking a 7% increase from February and a slight uptick from the same period last year.
This figure represents the highest monthly total since January 2023.
Andy Challenger, senior vice president of the firm, commented on the trend, saying, “Layoffs certainly ticked up to round out the first quarter, though still below last year’s levels.
Initial UI claims hit 221k last week while continuing was about 1.8 million; fact that foreign-born workers have had all net job growth recently helps explain why layoffs aren't filtering through to UI claims: large portion of newly unemployed aren't eligible for benefits: pic.twitter.com/bd8oOARJr6
— E.J. Antoni, Ph.D. (@RealEJAntoni) April 4, 2024
Many companies appear to be reverting to a ‘do more with less’ approach.”
The technology sector has been hit particularly hard, shedding 14,224 jobs in March alone and a total of 42,442 positions since the beginning of the year.
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Government agencies have also seen significant layoffs, with the sector announcing 36,044 cuts in March, including 10,000 from Veterans Affairs and 24,000 from the U.S. Army.
This marks the highest monthly total for government layoffs since September 2011.
Financial institutions have not been immune to the trend, eliminating 28,715 jobs during the first quarter.
However, this represents a 6% decrease from the same period in 2023.
Transportation companies have experienced a dramatic surge in layoffs, cutting 15,746 positions since the start of the year—a staggering 483% increase from the previous year.
The primary reasons cited for these job cuts include cost-cutting measures, restructuring, store closures, unfavorable market conditions, and bankruptcy.
Challenger job cuts were up only 0.7% y/y, but were the 3rd highest print post-pandemic relative to the pre-COVID norm.
How could that be? Base effects…
March '23 had nearly 90k announced layoffs vs the pre-COVID March average of ~55k.
There were ~90k layoffs announced in… pic.twitter.com/6S43IQ8pvx
— Parker Ross (@Econ_Parker) April 4, 2024
In contrast, companies have announced plans to add just 36,795 positions during the first quarter, a sharp 48% drop from the same period last year and the lowest number of hiring plans since 2016.
While the labor market has remained remarkably resilient over the past year, defying economists’ predictions of a slowdown, it appears to be normalizing after the rapid pace of 2022. However, it is far from experiencing a significant downturn.
These layoffs and the slowdown in hiring plans serve as yet another example of the failure of the Biden administration’s economic policies, dubbed “Bidenomics.”
The current administration’s inability to effectively address inflation and create a stable economic environment has led to increased uncertainty and hesitation among employers, ultimately resulting in job losses across various sectors.
As the nation awaits the release of the Labor Department’s February jobs report on Friday, economists anticipate that the unemployment rate will remain unchanged at 3.9%.
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However, the long-term impact of Bidenomics on the job market remains a concern, as businesses continue to struggle with the consequences of misguided economic policies.
