Job cuts across the United States surged by 80% in the first five months of 2025 compared with the same period last year, according to a new report from outplacement firm Challenger, Gray & Christmas.
Employers announced approximately 696,000 layoffs between January and May, up from just over 385,000 during the same months in 2024.
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The figure brings the year-to-date total within 65,000 of the full-year layoffs reported for all of 2024.
The report highlights rising economic uncertainty, weakened consumer demand, and reductions in government funding as primary factors behind the increase.
Government workforce downsizing leads layoffs
The largest number of job cuts came from the public sector, largely driven by the Department of Government Efficiency (DOGE). Federal government job reductions, contract terminations, and related cuts at nonprofit organisations contributed significantly to the rising total.
Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said: “Tariffs, funding cuts, consumer spending, and overall economic pessimism are putting intense pressure on companies’ workforce. Companies are spending less, slowing hiring, and sending layoff notices.”
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By GlobalDataThe government’s drive to streamline services has led to workforce reductions across a range of departments and partner organisations reliant on federal contracts. Many of these cuts are directly tied to halted or reduced funding.
Retail sector hit by bankruptcies and store closures
Retail layoffs reached nearly 76,000 through May, the second-highest total among all industries, marking a 274% rise compared to the same period in 2024.
Ongoing financial pressures, changing consumer habits, and competition from online platforms contributed to widespread job losses.
Well-known brands such as JCPenney, Macy’s, and Forever 21 have closed locations in 2025. Forever 21, in particular, is shutting down hundreds of stores as it exits the market, facing stiff competition from fast-fashion retailers Shein and Temu.
Other major closures included Rite Aid, Walgreens, and Party City. Craft supplier Joann also confirmed it would close all remaining stores following its second bankruptcy filing in less than a year. The company once operated more than 800 locations across the US.
Economic outlook remains uncertain for 2025
The Challenger report cites ongoing economic and market instability as contributing factors to the rise in layoffs. Business spending has contracted, and many employers have implemented hiring freezes or reduced headcounts to manage operational costs.
With job cuts already nearing last year’s total, analysts are monitoring whether these trends signal a longer-term employment downturn. Sectors sensitive to consumer spending and public funding are expected to remain vulnerable throughout the year.
The report underlines growing concern about recession risks and economic resilience, as businesses and workers alike face an increasingly unpredictable labour market.
