Hiring. US private sector employers aren’t.
Or at least not according to this week’s ADP readout which, along with a new Chicago Fed estimate of the unemployment rate, is all traders have to go on when it comes to the US labor market with government data releases suspended during the shutdown.
Generally speaking, I don’t count the Challenger job cuts tally as a “data point.” That’s certainly not to suggest it isn’t useful, it’s just to say that if anyone trades on it, I’ve never met them.
But I took to covering it in 2025 initially because of the DOGE cuts, but more recently because it’s helpful in gauging the rapidity of the labor market transition. Thursday’s update, covering September obviously, showed that layoff announcements dropped from August and fell versus September of 2024 as well, making last month just the third month during 2025 that announced cuts were lower YoY.
That, unfortunately, is where the good news stopped. When you add September’s 54,064 cuts to the YTD total, you get 946,426 up 55% from the same period in 2024 and the most for this point in a calendar year since 2020, when the world briefly ended.
Already, this year’s cuts make 2025 a “top” five layoff year in four decades of Challenger data. “Previous periods with this many job cuts occurred either during recessions or, as was the case in 2005 and 2006, during the first wave of automations that cost jobs in manufacturing and technology,” Andy Challenger said Thursday.
That makes sense. I personally think a recession’s likely early next year despite ongoing resilience in underlying demand, and you could certainly describe the technological landscape in 2025 as a “first wave” of automation. My daily, profanity-laden arguments with DALL-E notwithstanding, I have no use for an illustrator. OpenAI has that covered.
But the most concerning aspect of Thursday’s Challenger release wasn’t the job cuts, it was the hiring plans, and specifically a lack thereof.
As the figure shows, this is the slowest year for January-September since the financial crisis. The editorial accompanying Thursday’s release noted that seasonal hiring plans are down 75% YoY.
Some of this is just late-cycle dynamics. Hiring plans have receded every year since the pandemic. But it’s important we’re honest with ourselves, where that means it’s important Republicans acknowledge that part of this is attributable to rampant uncertainty.
Needless to say, the shutdown won’t help. Challenger counts nearly 300,000 planned government job cuts so far this year, with the vast majority attributable to DOGE and the Deferred Resignation Program.
Donald Trump and his associates have threatened to institute a new round of federal job cuts imminently, this time spearheaded by OMB director Russell Vought. “He can trim the budget to a level that you couldn’t do any other way,” Trump said this week of ol’ Russ, a key Project 2025 contributor.
On Thursday, in remarks to the press, a smirking Karoline Leavitt said Vought’s job cuts are “likely going to be in the thousands.”
Recently I made a switch to be head of eng at a medical software slash hardware startup. Ai has allowed me to do the work of at least 5 ppl, and five times faster. These are vibe metrics, but agreed with H this is the first wave of automation. Still need the bags of flesh, just less of em.
Dave Wash – Really? Im a data scientist at a fin tech who experiences daily pressure to automate everything from doc strings to unit tests to architecture diagrams. For every gain in efficiency, we lose reliability and integrity. We are producing unchecked garbage that WILL become tech debt in the future. When we catch our breath enough to go fix Claude Code hallucinations in non mission critical things we let the silicon brat do, we will have headaches. 2 steps forward (leaps if you listen to invstor relations), 1 step back (if you know how carefully the ai needs supervision).
Late to this post, but isn’t it fairly clear that, excluding tech investment spend, the rest of the economy is already very close to a recession? And then excluding wealth-effect driven spend by the highest income, the rest of the economy is already in the start of a recession?
Per Moody’s, 22 US states are in recession and the significant majority of states are either in recession or “treading water”.