Labor Market Under Pressure: Job Cuts Surge Past 1 Million as Household Debt Climbs

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U.S. employers announced 153,074 job cuts in October, pushing year-to-date layoffs to 1,099,500, the highest October total since 2003, according to outplacement firm Challenger, Gray & Christmas. The report stated that October’s total rose 175% from the same period a year earlier and 183% from September. “October’s pace of job cutting was much higher than average for the month,” said Andy Challenger, workplace expert and chief revenue officer at the firm. “Some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes," he said.

The breadth of cuts widened. Challenger tracked nearly 450 separate job-cut plans in October, up from just under 400 in September. The firm noted that companies have typically avoided announcing reductions late in the year, making the scale of October’s actions unusual. “This is the highest total for October in over 20 years, and the highest total for a single month in the fourth quarter since 2008,” Challenger said.

Sector details underscore shifting pressure points. Technology firms announced 33,281 cuts in October and 141,159 for the year to date, while warehousing led all industries in the month with 47,878 reductions, a jump the firm associated with automation and post-pandemic capacity resets. Retailers announced 2,431 cuts in October and 88,664 for the year to date. Hiring plans have softened: employers have announced 488,077 planned hires through October, a 35% decrease from the same point last year, marking the lowest year-to-date total since 2011.

The layoff surge arrived alongside a Wednesday report from the Federal Reserve Bank of New York, showing that household debt continued to edge higher in the last quarter. Total balances increased by $197 billion, or 1%, in the third quarter to $18.59 trillion, according to the New York Fed’s Center for Microeconomic Data. Mortgage balances rose by $137 billion to $13.07 trillion, credit-card balances increased by $24 billion to $1.23 trillion, and student-loan balances climbed by $15 billion to $1.65 trillion.

“Household debt balances are growing at a moderate pace, with delinquency rates stabilizing,” said Donghoon Lee, Economic Research Advisor at the New York Fed. “The relatively low mortgage delinquency rates reflect the housing market’s resilience, driven by ample home equity and tight underwriting standards.” The report noted that aggregate delinquency rates remained elevated in the third quarter, with 4.5% of outstanding debt in some stage of delinquency. Transitions into serious delinquency increased across most debt types, with mortgages being a notable exception.

Together, the reports portray a labor market undergoing a late-year retrenchment even as consumers carry larger debt loads. Challenger said cost-cutting was the top rationale for layoffs in October, with artificial intelligence cited as the second-most common factor that month. AI-related restructuring has been linked to 48,414 cuts so far in 2025. Meanwhile, the New York Fed highlighted that mortgage originations ticked up to $512 billion in the quarter, credit-card limits rose by $94 billion, and student-loan serious delinquencies remained elevated at 9.4%, reflecting the resumption of previously unreported federal delinquencies on credit files.

For policymakers monitoring inflation and household demand, the juxtaposition is notable: employers are trimming staff at the fastest rate in more than two decades in October, while households continue to borrow—albeit with mixed signs on repayment health. As Challenger put it, laid-off workers “are finding it harder to quickly secure new roles, which could further loosen the labor market.”