Jobless claims are low, job cuts are high. Who you gonna believe?
I’m just joking. Those things aren’t mutually exclusive, and the government’s claims series is apples to oranges with the Challenger job cuts dataset.
Still, the two make for an interesting juxtaposition currently. Thursday’s monthly update from Challenger, Gray & Christmas showed 62,075 job cut announcements for July, up from June. It was the first increase in layoff announcements since the “DOGE” shock began to fade.
The figure’s a rather stark reminder of the impact Elon Musk had during his short tenure in government. This month’s cuts were also slightly higher than those tallied for July of 2024. On a YoY basis, cuts, as tallied by Challenger, are up nine of the last 11 months.
For 2025 as a whole, layoff notices sum to 806,383. That’s the most for the first seven months of a year since COVID, and up 75% from the same period last year.
By contrast (sort of), initial jobless claims stayed very low in the week to July 26, Thursday’s weekly release showed. At just 218,000, the initial filers headline barely moved from the prior week’s unrevised level of 217,000. Consensus expected 224,000 from the print.
As the figure shows, the four-week average has now collapsed to just 221,000. It was 245,750 a mere seven weeks ago.
Continuing claims, meanwhile, were 1.964 million in the week to July 19 (that series is reported on a two-week delay). That too was below estimates.
Certainly, the sharp increase in layoffs announcements so far this year is bad news. With the possible exception of the world’s richest man, no one delights in seeing other people lose their jobs.
But — and most of you know this — the Challenger release isn’t something anyone trades on. What counts for market participants is claims, and at least on the initial filers series, there’s no sign of trouble there.
Approximately 36% of the US workforce participates in the gig economy, according to this https://teamstage.io/gig-economy-statistics/ This translates to about 57 million people who engage in gig work, either as their primary or secondary source of income. It’s convenient these folks are not counted. As a former freelancer, if the phone stops ringing, you’re not fired nor laid off. You just disappear.
This! Gig workers are self-employed. COVID was the first time, I think, any self-employed person may have qualified for unemployment benefits. Prior to the ascendency of gig work, many self-employed were tradesmen or creatives and as noted, keeping the pipeline full was not just part of the job, it was do or die. Post COVID may have been the first time many gig workers experienced unemployment in this sense, so any ripple effects of income loss for this cohort (due to increase competition, perhaps, or slowing demand for services) will be a relatively new phenomenon that I don’t think our current array of data systems are fit to track.
I wonder how many gig workers actually file unemployment claims or receive benefits. Wasn’t that a temporary pandemic thing? I think it is possible that the increasing number of gig workers is actually depressing unemployment claims.