"180,000 Laid Off" Largest US Layoffs Since Financial Crisis

This year, the scale of layoffs by U.S. companies has surged to the highest level since the 2008 global financial crisis. As concerns grow over a deep economic recession, the wave of layoffs that began in big tech is spreading across all industries, including finance and media.

According to a report by Challenger, Gray & Christmas (CG&C), a U.S. workforce management firm, the number of layoffs by U.S. companies in January and February reached about 180,000, marking the highest level since 2009, right after the global financial crisis. More than one-third of the total layoffs were concentrated in technology companies such as big tech.

In February, a total of 77,770 mass layoffs were carried out at once, more than five times the 15,245 layoffs a year earlier. Andrew Challenger, Vice President of CG&C, pointed out, "Currently, overwhelming layoffs are occurring in the technology sector," adding, "As consumer spending follows the economic environment, layoffs are spreading to retail and financial industries."

Big tech companies such as Microsoft (MS), Google Alphabet, Meta, as well as fintech firms including PayPal, Stripe, Affirm, and Upstart, have cut thousands of jobs this year to reduce costs and protect profits amid uncertain economic outlooks. Meta, which cut 11,000 jobs at the end of last year, has started additional layoffs involving thousands of employees this week.

MS announced in January that it would lay off 10,000 employees, mainly in the technology sector, while Amazon increased its previously announced layoff number of 10,000 to more than 18,000 employees. Twitter, after being acquired by Tesla CEO Elon Musk, laid off over 80% of its workforce through aggressive cost-cutting measures. PayPal, a U.S. payment service provider, also reduced about 2,000 employees, accounting for 7% of its global workforce.

The layoffs were proactively implemented amid simultaneous signs of an economic downturn, such as funding shortages caused by high interest rates. The layoff wave is also reflected in U.S. Department of Labor statistics. The Department of Labor announced that new unemployment claims for the week of February 26 to March 4 increased by 21,000 from the previous week to 211,000. This is the highest level in 10 weeks since last Christmas and significantly exceeds Wall Street's forecast of 195,000 claims.

Jerome Powell, Chair of the U.S. Federal Reserve (Fed), recently indicated at a congressional hearing that "the labor market remains extremely tight," suggesting the possibility of a big rate hike (a 0.5 percentage point increase in the benchmark interest rate) in March and that rates could be raised more than previously expected. The U.S. employment report for February, which the Fed closely monitors, will be released on the 10th. Wall Street expects that more than 200,000 jobs were added last month. Experts interpret Powell's hawkish remarks as signaling the possibility of further rate hikes, which could expand the wave of layoffs.

Layoffs are darkening the economic outlook and fueling a decline in the stock market. Major big tech companies such as Alphabet, MS, Amazon, and Meta saw their stock prices plunge 29% to 64% last year, then rise 6% to 52% this year, but it is uncertain how long this upward trend will continue. James Tierney, Chief Investment Officer (CIO) at AllianceBernstein, warned, "Corporate layoffs are not a welcome issue for investors," predicting a decline in stock prices.