Troubling job numbers indicate weakening economy

Late last month, Rivian announced plans to lay off 600 employees (about 4.5% of its workforce) and General Motors laid off about 1,000 workers in Detroit and another 700 or so in Ohio.

Those are small parts of a growing trend showing significant cooling in the U.S. labor market, foreshadowed in the last federal jobs report (for August, released in September, before the government shutdown). Weeks before, Federal Reserve Chair Jerome Powell said the labor market was starting to show instability through a slowdown in hiring and weaker wage gains (Bureau of Labor Statistics findings that were so unwelcome by the Trump administration that the President fired BLS Commissioner Erika McEntarfer, accusing her of “rigging” the data “to make the Republicans, and ME, look bad.”)

But facts matter; since then, these companies have announced layoffs:

Amazon is reducing its workforce by about 14,000 positions.

Nestle is cutting 16,000 jobs worldwide, citing new automation.

Paramount Skydance is cutting 1,000 jobs.

Proctor & Gamble plans to cut about 7,000 jobs over the next two years.

Target is laying off 1,800 jobs.

UPS is finishing 2025 cutbacks of 48,000 jobs .

Walmart is following layoffs of about 1,500 jobs this spring with a new round of layoffs affecting hundreds of workers across various locations, Bloomberg reports.

Also, Goldman Sachs and JPMorgan both said they’ll scale back hiring as they start to add technologies into operations.

Amazon and Walmart – the nation’s top two private-sector employers – both attributed the job losses to Artificial Intelligence letting them replace human workers.

Why else? Some execs blamed inefficient bureaucracies, mergers or growing costs from uncertainty from chaotic trade policies as well as AI, plus an anticipated downturn in consumer spending when prices from tariffs are inevitably passed on to shoppers.

“It’s taking more time to get a new [job] and as a result, the number of people who have been out of work for more than six months has risen,” said business analyst Jill Schlesinger. “Those dual trends tend to occur when the economy is softening, which usually has one positive benefit: historically, a slowing economy keeps a lid on inflation. But that’s not expected today, where tariff-related increases are expected to push prices higher in the coming months.”

Andy Challenger, senior vice president of executive outplacement firm Challenger, Gray & Christmas, added, “There's a real cooling in the labor market. We're also having lots of individual conversations with companies that are letting us know to expect future layoffs.

“There is more reason to be pessimistic about the labor market than optimistic we'll see some major bounce back,” he continued.

Other troubling signs:

* The unemployment rate is stuck at about 4.3% -- a number that’s sure to rise with laid-off federal workers fired by severe actions by Elon Musk’s DOGE, Russell Vought’s Office of Management & Budget, and Trump;

* the number of jobless young workers is up; and

* this year, U.S. employers have added fewer jobs on a monthly basis than in recent years.

 

The Jobs Posting Index from the Federal Reserve is at its lowest in years, according to Dean Baker, an economist from the Center for Economic and Policy Research and author of “Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.” And it’s not just progressives who are sounding an alarm. The Illinois Manufacturer Association (IMA) last month said employers need some predictability in the economy.

“Trade and tariff policies that are changing consistently make it very difficult to operate today or plan for the future,” said IMA President and CEO Mark Denzler. “We've seen a number of companies pull back on capital expenditure and hiring until the tariff and trade issue settles down a bit. At the same time, we've seen Illinois manufacturers take advantage of this situation with companies looking to reshore or find new suppliers in the United States.”

Meanwhile, on paper, the stock market has prospered in a bull market dating to October 2022. However, Wall Street is far from Main Street. Gallup reports that 38% of U.S. households have zero ties to the stock market, even taking into account indirect holdings such as mutual funds, IRAs, 401(k) plans, etc.

Americans’ hopes are fading, too, according to a recent Wall Street Journal/NORC poll, which showed that “the share of people who say they have a good chance of improving their standard of living fell to 25%, a record low in surveys dating to 1987.” Even more telling, the poll said 70% of us say we no longer believe in “the American Dream,” meaning that hard work results in a  better life – the highest level in almost 15 years.