U.S. Layoffs Hit Highest October Level in Over Two Decades
In October, there was a notable increase in company announcements regarding layoffs in the United States, attributed to the ongoing disruption of the labor market by AI technologies. Last month, announced job cuts surged by over 153,000, as per reports on Thursday. This figure represents a 175% increase compared to the same month a year prior and marks the highest October rise since 2003. In the first ten months of this year, layoff announcements exceeded one million, reflecting a 65% increase relative to the same timeframe in the previous year. “This represents the peak total for October in more than two decades, and the highest total for any month in the fourth quarter since 2008. Like in 2003, a disruptive technology is changing the landscape,” the report stated.
The outplacement and executive coaching firm indicated that America’s labor market is continuing to stabilize following a pandemic-induced surge. However, it also highlighted “AI adoption, softening consumer and corporate spending, and rising costs” as significant factors exerting pressure on companies. Indeed, prominent corporations like Amazon and Target have disclosed significant layoffs in recent months, with numerous instances attributing these decisions to advancements in AI. Nevertheless, the announcement of layoffs does not instantaneously result in an increase in unemployment rates.
The assessment of the labor market’s health has been further complicated by the ongoing government shutdown, which has now reached a record duration. Since the start of October, the release of official economic statistics has been halted, encompassing the Labor Department’s pivotal employment report, which features the unemployment rate and monthly payroll growth figures. The September jobs report, initially set for release on October 3, has not been published, and there will be no October jobs report this month, as it was originally slated for Friday. This has posed challenges for economic policymakers, including officials from the Federal Reserve, in making critical decisions.
Investors and policymakers are increasingly turning to alternative data sources, including Wednesday’s private-sector payroll figures from ADP and the Challenger report, to gauge the current condition of the US economy. However, as Fed Chair Jerome Powell articulated in a news conference last month, private data cannot supplant government figures, which are broadly recognized as the “gold standard” for assessing the world’s largest economy. The ongoing lack of those figures may jeopardize monetary policymaking and threaten future rate reductions. “There’s a possibility that it would make sense to be more cautious,” Powell stated.
