The Daily Populous Thursday March 6th, 2025 evening edition
Authored by cnn.com and submitted by spherocytes

The Trump administration’s massive federal cuts and swelling feelings of economic uncertainty helped fuel a recession-level spike in layoff plans last month, new data showed Thursday.

US-based employers last month announced plans to slash 172,017 jobs, a 103% increase from a year ago and the highest February total since 2009, according to Challenger, Gray & Christmas’s latest monthly job cuts report released Thursday.

It’s the 12th highest monthly total in the 32 years Challenger has been tracking job cuts. The 11 others (four came during the Covid-19 pandemic) all occurred when the US was in a recession, Challenger data shows.

The largest share of job cut announcements came in the government sector, where the newly formed Department of Government Efficiency has axed jobs, slashed federal spending and scrapped contracts.

By Challenger’s count, there were 62,242 announced cuts across 17 federal agencies. That’s a 41,311% increase from the 151 cuts announced through February 2024, Challenger noted.

The DOGE effect was not limited to the public sector: Downstream impacts, such as the loss of funding for private nonprofits, led to another 894 cuts, according to the report.

Outside of the government, the next largest cuts were in retail (38,956), technology (14,554) and consumer products (10,625).

Thursday’s report is “something to be concerned about,” said Gregory Daco, chief economist at EY Parthenon, noting that the government cuts accounted for one-third of the overall announced layoffs.

“That in itself is something that is concerning and does portend a shift in the way employers are approaching this labor market,” he said.

As far as the reasons behind the planned cuts (which could come to fruition in the coming weeks and months), DOGE actions led the way (63,583), followed by bankruptcy (35,172), market/economic conditions (28,098) and restructuring (16,828).

“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,” Andrew Challenger, senior vice president at Challenger, Gray & Christmas outplacement and executive coaching firm, said in a statement.

Thursday’s report did include a silver lining: Companies’ hiring plans surged in February to 34,580, marking the highest number for February since 2022.

Thursday’s Challenger report provided the first substantial economic data point on the federal workforce cuts and their potential ripple effects. Economists also are closely watching the weekly unemployment claims filings as a gauge of labor market health.

The latest jobless claims data shows that layoff activity remains muted and in line with what was seen pre-pandemic and below historical averages. The number of initial claims dropped last week by 21,000 to 221,000, according to a separate report released Thursday by the Labor Department.

That report did show an increase in the number of federal workers who filed for unemployment (that particular data lags by a week). The number of federal workers who filed initial claims under the Unemployment Compensation for Federal Employees program totaled 1,634 for the week ended February 22, that’s up 1,020 filings from the week before.

And based on data released earlier this week, the job market appears to be taking a turn for the worse. Payroll giant ADP’s latest employment report showed that hiring activity in the US private sector slumped in February.

Private-sector employment increased by an estimated 77,000 jobs in February, according to ADP. That’s a dramatic drop-off from the strong job growth of 186,000 seen in January and barely half the 142,500 net gain that economists had expected, according to FactSet estimates.

Service-based industries tied heavily to consumer activity saw some of the biggest employment declines, ADP noted.

“I know there’s been a lot of attention to tariffs, new policies being enacted even this week, but we can’t lose sight also of the biggest driver of the economy, which is consumers,” Nela Richardson, chief economist at ADP, said during a call with reporters Wednesday, when the report was released.

Consumer spending fell in January for the first time in nearly two years and saw the biggest monthly drop-off since February 2021, according to Commerce Department data released last week.

The spending dip comes with some caution and important context: Shoppers typically take a breather after holiday spending sprees, and January had some major weather and wildfires. Economists say that one month does not make a trend.

“So long as the consumer stays resilient, I think the economy is in good shape,” Richardson said.

ADP’s report doesn’t always correlate to (and, in some instances, has varied wildly from) the monthly jobs report put out by the Bureau of Labor Statistics (the gold standard metric); still, the ADP data is looked to as a gauge of how the labor market is trending.

What’s expected in Friday’s jobs report

The BLS is set to release the February jobs report at 8:30 a.m. ET Friday; and, by and large, economists expect it will show another month of solid job gains.

Consensus estimates are for a net gain of 160,000 jobs and for the unemployment rate to stay at 4% (near historically low levels). If the forecasts hold, February’s tally would outpace January’s lower-than-expected 143,000-job gain — a total that economists say was potentially influenced by seasonal factors, frigid weather and the Los Angeles wildfires.

The DOGE-driven employment cuts, however, aren’t likely to make a big splash in February’s jobs report.

That’s partly because of timing: The bulk of the layoffs didn’t occur until after the survey period (which is the week of the 12th). And those that did might not show up anyway: They’re counted as employed if they received pay for any part of the pay period that includes the 12th day of the month.

Also, some federal workers are serving out a paid notice period where they essentially quit but won’t be unemployed weeks or even months from now.

It’s more likely, economists have told CNN, that federal cuts will be more visible in the March and April jobs reports.

The February data could show some weakness in the federal sector. However, since those jobs account for a tiny percentage of overall employment, it shouldn’t move the monthly total in a substantive way, Claudia Sham, chief economist at New Century Advisors, told CNN.

“In some ways, [the February jobs report] could be a snapshot of where the labor market was before things started really moving,” said Sahm, who developed a widely followed recession indicator. “And we won’t see anything really in response to the tariffs or other policies.”

However, the lead up to Friday’s jobs report will include another blind spot. Because of a calendar-related quirk, the Job Openings and Labor Turnover Survey for January won’t be released until next week. Typically, JOLTS is released three days before the jobs report.

In the years following the economy-upheaving pandemic, job growth has slowed, but it has not collapsed. The gains have remained solid enough to fuel consumer spending and put the economy on track for a “soft landing” of reining in inflation without triggering a recession.

“We have been in an environment where the labor market has its flaws but has been in a really good place,” Sahm said. “There’s a certain degree of resilience, given we have a low unemployment rate, low claims and job growth has been, on average, a really respectable pace.”

“But all eyes are on if we’re going to hang on to that,” she added.

Heading into February, the US labor market was still chugging right along at more of a pre-pandemic tick and continuing a historic period of expansion.

Some cracks, however, started to emerge during the past year: The churn that’s needed for a healthy labor market slowed significantly. Businesses weren’t hiring as much, folks weren’t as eager to quit and those without jobs were staying on the sidelines for longer.

Economists chalked this up to election-year uncertainty, over-hiring in sectors such as leisure and hospitality and health care, the cumulative effect of fast-rising prices and the sheer weight of interest rates being at a 23-year high.

Still, businesses and economists alike flagged that there was pent-up momentum waiting to be released — once the election passed and interest rates started to ease.

Once the election was decided, consumer and business sentiment shot higher, and hiring activity was on the rise, according to an array of surveys and economic data.

The “Trump bump,” however, has given way to rising levels of economic uncertainty from businesses and consumers who are reporting jitteriness about the effect of sweeping policy actions such as broad-based tariffs, the direct and ripple effects from slashing federal jobs and funding and mass deportations.

While it’s too soon to tell what the economic impacts will be from these moves, the unknowns can deter businesses’ plans for expansion, said Martha Gimbel, economist and executive director and co-founder of the Budget Lab at Yale University.

“At a time where there is such uncertainty about government spending, where there is such uncertainty about tariffs, why would you make investments in your future workforce when you don’t know what the economic situation is going to be and you don’t know what your needs are going to be?” Gimbel said. “You’re starting to see more and more people seem to be moving toward a batten-down-the-hatches mentality.”

owls42 on March 6th, 2025 at 13:25 UTC »

Republicans SUCK. Each time they are in power they ruin the economy.

Wrecker013 on March 6th, 2025 at 13:17 UTC »

inb4 "And here's why this is Biden's fault even though there have been dramatic changes to both actual government policy and the perception of it since November, and especially since January."

reddittorbrigade on March 6th, 2025 at 13:17 UTC »

That includes Musk and Trump firing tons of federal employees.

Trump recession sucks.