Highest Job Cuts Since 2020 Amid DOGE Layoffs, Putting Pressure on Friday Payroll

The U.S. has just experienced the highest job cuts since the COVID pandemic, highlighted by aggressive layoffs from DOGE, which are putting pressure on Friday's nonfarm payroll data.

President Trump's efforts to cut down spending and Elon Musk-led DOGE initiatives are shaking the overall job market, with U.S. job cuts at their highest level in nearly five years, according to Challenger, Gray & Christmas, which reported this on Thursday.

Stocks tumbled following the release, with S&P 500 futures dropping more than 1.2% and Nasdaq 100 down 1.6%.

The firm reported that U.S. employers announced 172,017 layoffs for the month, up 245% month-over-month and 103% year-over-year, marking the highest monthly count since July 2020. So far this year, employers have announced 221,812 job cuts, the highest year-to-date total since the 2009 financial crisis, when 428,099 job cuts were planned.

"Private companies announced plans to shed thousands of jobs last month, particularly in retail and technology. With the impact of the Department of Government Efficiency (DOGE) actions, as well as canceled government contracts, fears of trade wars, and bankruptcies, job cuts soared in February," said Andrew Challenger, Senior Vice President and workplace expert for Challenger, Gray & Christmas.

More than one-third, or 62,422 announced job cuts, came from Elon Musk's efforts. The government has cut 62,530 positions, an increase of 41,311% from the 151 cuts announced through February 2024.

"It appears the administration wants to cut even more workers, but an order to fire roughly 200,000 probationary employees was blocked by a federal judge. It remains to be seen how many more workers will lose their federal government roles," said Challenger.

Retail saw 38,956 cuts for the month as companies such as Macy's and Forever 21 announced sharp staff reductions, translating to a 572% increase year-over-year. Technology firms also reported another 14,554 reductions.

This data comes after significantly below-average private sector employment figures. Companies added just 77,000 new workers during the month, a sharp decline from the upwardly revised 186,000 in January and well below the 148,000 consensus estimate, according to ADP.

Investors are now closely watching Friday's nonfarm payroll report, which is expected to show job gains of 170,000 and an unemployment rate steady at 4%.