- The number of new lay-offs in July rose by 140% compared with the same period last year, to just over 62,000- the highest figure in this month since the beginning of the pandemic.
- Government cuts and AI adoption were major drivers, heavily impacting public, healthcare, and tech sector jobs.
- Layoffs in 2025 have already exceeded 2024’s total, with economists warning the trend could rival 2008 levels.
There was a sharp increase in lay-offs by U.S.-based companies in July, and it is a significant change in the state of the labor market. There were 62,075 announced layoffs, or 29% more than June, and 140% compared to July of last year. This information is based on a recent report by Challenger, Gray and Christmas.
The announced cuts in July were much higher than the four-year average (23,584) per month in this month. They were also higher than the wider long-run average (60,398) of July over the ten years. This drastic increase personifies the rising employment crisis in different sectors, with some industries being financially stressed and downsizing.
Federal Cuts and AI Lead the Surge
The decline in federal spending is one of the major causes associated with the increased number of layoffs. Also known as the DOGE Impact, these budget cuts, most aligned with the government, have already precipitated 289,679 layoffs in 2025. The cuts have also had a considerable impact on the public sector, more so on the non-profits and healthcare organizations that are dependent on the government.
BREAKING: US job cut announcements jumped +140% YoY in July, to 62,075, well above the 4-year average.
This is more than double the average July job cut number of 23,584 between 2021 and 2024.
Year-to-date, US-based employers have announced 806,383 job cuts, the highest total… pic.twitter.com/M4x0Evqr6P
— The Kobeissi Letter (@KobeissiLetter) August 1, 2025
The government sector registered the most layoffs in 2012, at 292,294. Technology companies were next, with 89,251 job cuts, and retail industries announced 80,487 job losses. More than 10,000 of them were laid off solely in July because of the deployment of artificial intelligence to different operations.
Issues related to the tariff have also led to employee unrest. In 2025, approximately 6,000 job opportunities were lost because of a shift in trade policy and increasing importation prices. Automation, federal spending cuts, and uncertainty in trade between countries have led to a very difficult situation of both corporate and individual job threats.
Labor Market Weakens Despite Earlier Optimism
Through the first half of 2025, U.S. employers announced 806,383 layoffs, the highest number of any January to July period since 2020. Almost 1.85 million jobs were cut because of pandemic-related perturbations in the same year.
The number is also already 6% greater than the total layoffs for 2024, which betokens an even more severe contraction than was initially expected. This was the widely anticipated stabilization in labor that analysts were speculating on at the beginning of the year due to a deceleration in inflation and a cooling off in the labor market. Recent trends, however, show that this is not the case.
According to Andrew Challenger, the senior vice president of Challenger, Gray & Christmas, the continued downsizing signifies a fundamental change in the way organizations are run. He pointed out that companies are reworking operations in an uncertain economic situation. They are thinking about the changing technology, cost pressure, and policy changes.
Sectors Brace for Further Workforce Reductions
The present rate of workplace downsizing has seen most sectors prepare to be downsized even more. With the economic headwinds still going on, employers have been forced to make hard decisions to save margins and streamline operations. Cautious economists warn that the trend could extend well into late 2025, and is likely to continue with fiscal tightening and automation.
The labour market is now vulnerable despite the fact that some industries are still doing well. As the cuts grow throughout the sectors and government employment diminishes at a speedy rate, the idea of a golden age of labor is becoming a dream that is becoming increasingly distant.
Companies are getting accustomed to it, but it is at a cost to the laborers. If the trend continues, 2025 could end up with one of the most significant layoffs since the 2008 economic disaster.
