Several major U.S. corporations have announced plans to lay off thousands of workers in the past month, marking the highest level of job cuts in the American economy since 2020, when global economic activity was disrupted by the COVID-19 pandemic.
According to a report from Bloomberg on Monday, major companies such as Target, Amazon, Paramount, and Molson Coors have collectively announced plans to reduce their workforce by over 17,000 employees. The reasons for these layoffs include factors like the impact of artificial intelligence, declining sales, and broader economic adjustments.
These developments suggest a weakening labor market, which had already shown signs of stagnation during the summer. The last jobs report from the Bureau of Labor Statistics (BLS) indicated that the economy added only 22,000 jobs in August. Although the BLS has not released monthly employment data due to the ongoing federal government shutdown, Challenger, Gray & Christmas, an outplacement firm, reported nearly 950,000 job cuts through September—marking the highest year-to-date total since 2020.
Dan North, a senior economist at Allianz Trade Americas, noted a clear shift in the job market, stating, “We’re not just in a low hire, low fire environment anymore. We’re firing.”
Joseph Brusuelas, chief economist at RSM US, warned that the labor market could deteriorate further in the coming months. He attributed this to “adverse policy shocks emanating from Washington” and a shift in corporate behavior, where companies had previously hoarded labor but are now more willing to implement layoffs.
John Challenger, CEO of Challenger, Gray & Christmas, emphasized that the recent layoffs are not temporary. “These are major layoffs, the kind of which we only see in periods of real change in the economy,” he said.
Economists face challenges in assessing the current state of the economy due to the stark contrast between the experiences of high-income and low-income households. A report from CNBC highlighted the emergence of a “K-shaped” economy, where wealthier consumers continue to spend or even increase their spending, while lower-income individuals are forced to cut back.
For example, Chipotle reported that customers earning less than $100,000 annually, who make up about 40% of its customer base, are shopping less frequently. Coca-Cola and Procter & Gamble also observed similar trends, with higher-income consumers purchasing premium products and larger quantities, while lower-income shoppers reduced their spending.
A separate report from Fortune confirmed the K-shaped nature of the economy, noting that the percentage of Americans taking on subprime loans reached its highest level since 2019. This trend indicates growing financial strain among many households. Additionally, Moody’s analysis showed that the top 20% of U.S. households are driving economic growth, while the remaining 80% have seen little to no progress.
Lucia Dunn, an economist at Ohio State University, warned that rising inequality could lead to increased social and economic instability. “We are losing the middle class,” she said. “When you get to a society where there are a lot of people at the bottom and a small group at the top, that’s a prescription for real trouble.”
Amid these developments, a new analysis from Oxfam highlighted extreme wealth inequality in the U.S., noting that the 10 wealthiest Americans gained nearly $700 billion this year. At the same time, millions of people have lost access to critical federal food assistance due to the government shutdown and previous policy decisions.
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