Layoffs in the U.S. have skyrocketed to levels not seen since the last two recessions, driven by mass federal government job cuts, canceled contracts, and growing concerns over trade wars. The latest data offers the clearest sign yet of the impact of President Donald Trump’s policies on the labor market.
Job Cuts Hit Highest Level Since 2020
Global outplacement firm Challenger, Gray & Christmas reported Thursday that planned job cuts surged 245% to 172,017 in February, marking the highest level since July 2020, when the economy was reeling from the COVID-19 pandemic. It was also the highest February total since the Great Recession 16 years ago.
Government Layoffs Lead the Surge
The federal government accounted for the bulk of the job cuts, with Challenger tracking 62,242 layoffs from 17 different agencies. So far in 2025, the federal government has laid off 62,530 workers, a staggering 41,311% increase compared to the same period in 2024.
“When mass layoffs occur, it often leaves remaining staff feeling uneasy and uncertain,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas. “The likelihood that many more workers leave voluntarily is high.”
Impact of the Department of Government Efficiency (DOGE)
Tech billionaire Elon Musk’s Department of Government Efficiency (DOGE) has aggressively slashed public spending, leading to funding freezes, deep budget cuts, and the termination of thousands of federal employees, including scientists and park rangers.
Trump has repeatedly described the federal government as bloated and inefficient. However, a federal judge last week temporarily blocked the administration from ordering the Department of Defense and other agencies to proceed with mass firings of recently hired employees.
Widespread Effects on Private Sector
Federal contractors have also been impacted, extending job losses into the private sector. Tariffs implemented or threatened by the White House contributed to additional layoffs last month.
Challenger reported that the “DOGE impact” was the primary reason for 63,583 layoffs, including both direct government job losses and contractor terminations. The loss of funding to private non-profits accounted for another 894 announced job cuts.
The hardest-hit region has been Washington, D.C., where 61,795 jobs have been lost in 2025 so far, compared to just 60 in the same period last year.
Broader Industry Layoffs
Beyond government cuts, other industries—including retail, technology, services, and consumer products—also experienced job losses in February.
These federal job cuts are unlikely to be reflected in Friday’s employment report, as most occurred outside the survey period. However, hiring freezes and funding cuts could influence government and contractor employment trends in the coming months.
Economic Outlook and Job Market Forecast
Despite the surge in layoffs, nonfarm payrolls are still expected to increase by 160,000 jobs in February, following a 143,000-job gain in January, according to a Reuters survey of economists. The unemployment rate is projected to remain at 4.0%.
Uncertainty Looms Over U.S. Labor Market
As mass layoffs continue, concerns grow over how federal job cuts and economic policy shifts will shape the labor market. With trade tensions, spending reductions, and workforce uncertainty mounting, the coming months will be critical in determining the broader economic impact.
