• Employers announced 108,435 layoffs in January, up 118% from last year and 205% from December in worst January since Great Recession
• Hiring intentions collapsed to just 5,306 positions, the lowest January total since tracking began in 2009
• Amazon and UPS accounted for 40% of cuts while AI, economic conditions and contract losses drove reductions across five major industries

WASHINGTON, DC (TDR) — American employers announced more than 108,000 layoffs in January, marking the worst start to a year for job cuts since 2009 when the nation was emerging from the Great Recession, according to data released Thursday by outplacement firm Challenger, Gray & Christmas.

The surge in planned layoffs—up 118% from January 2025 and 205% from December—coincided with a dramatic collapse in hiring intentions as employers announced just 5,306 new positions, the lowest January figure on record. The twin data points paint a picture of corporate America entering 2026 with deep pessimism about economic prospects.

“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January. It means most of these plans were set at the end of 2025, signaling employers are less-than-optimistic about the outlook for 2026.”

Transportation And Tech Lead Sector Cutbacks

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Transportation companies announced the most layoffs in January with 31,243 cuts, driven almost entirely by United Parcel Service which plans to eliminate approximately 30,000 operational jobs as it reduces business with Amazon and focuses on turnaround efforts.

Technology sector job cuts totaled 22,291, with Amazon leading through 16,000 corporate layoffs announced as part of restructuring aimed at “removing bureaucracy.” The e-commerce giant’s cuts came just three months after laying off another 14,000 workers in 2025.

Healthcare and health products firms announced 17,107 job cuts—the most since April 2020—as hospital systems face pressure from rising labor costs, inflation and lower Medicare and Medicaid reimbursements. Chemical companies reported 4,701 layoffs, with Dow Inc. explicitly citing AI-driven automation in its operations. Financial services accounted for 3,635 cuts.

“About 40% of January’s layoff announcements can be tied to two firms: Amazon and UPS, which outlined plans for 16,000 and 30,000 job cuts, respectively.”

Multiple Causes Behind Layoff Surge

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The reasons employers cited for layoffs reflect a complex economic landscape. Contract loss topped the list at 30,784 cuts, with UPS’s reduction of Amazon deliveries accounting for the bulk. Market and economic conditions ranked second at 28,392 layoffs, followed by restructuring at 20,044 and closures at 12,738.

Artificial intelligence was cited as the reason for 7,624 cuts in January alone, after being blamed for 54,836 layoffs throughout 2025. However, Andy Challenger, chief revenue officer at the outplacement firm, cautioned against overemphasizing AI’s role.

“It’s difficult to say how big an impact AI is having on layoffs specifically. We know leaders are talking about AI, many companies want to implement it in operations, and the market appears to be rewarding companies that mention it.”

Tariffs were cited for 294 cuts last month, after being attributed to 7,908 announced cuts in 2025. Some economists point to President Donald Trump’s new tariff regime as creating operational cost pressures alongside stubborn inflation.

Disconnect Between Announcements And Official Data

Despite the surge in layoff announcements, the increase hasn’t yet appeared dramatically in official government statistics, creating what some economists call a puzzle in labor market data.

Initial jobless claims for the week ended January 31 totaled a seasonally adjusted 231,000—the highest since early December but likely influenced by brutal winter storms that hit large parts of the country. The longer-term trend remained at its lowest level since October 2024.

Some analysts attribute this disconnect to severance strategies that delay workers’ entry into unemployment systems. Major employers are providing 90-day notice periods where employees remain on payroll, and many companies favor voluntary buyout programs where departing workers typically cannot claim unemployment benefits immediately. Additionally, displaced workers turning to consulting or gig economy platforms may technically remove themselves from claimant pools even while underemployed.

“The phenomenon of ‘invisible unemployment’—where hiring freezes prevent new entrants from absorbing the displaced—has taken hold, masking the true severity of the labor market’s looseness.”

Federal Labor Department filings under Worker Adjustment and Retraining Notification regulations indicate more than 100 companies gave notice of significant layoffs in January, suggesting the Challenger data reflects genuine corporate planning rather than statistical anomaly.

Economists Describe ‘Low-Hire, Low-Fire’ Market Shifting

For more than a year, economists have characterized the American labor market as existing in a “low-hire, low-fire” equilibrium where companies avoided both aggressive hiring and mass terminations. January’s data suggests that balance may be tipping toward more active job cutting.

The collapse in hiring plans reinforces concerns about labor market deterioration. The 5,306 announced new hires represent a 13% decline from January 2025 and nearly 50% drop from December’s total.

Aaron Sojourner, senior researcher at the W.E. Upjohn Institute for Employment Research, warned that widespread vulnerability exists across sectors.

“Every sector is at risk for layoffs in 2026. Unemployment is rising and job growth is slowing broadly across sectors. Wage growth has decelerated versus a year ago.”

Last year saw the weakest U.S. job growth outside of a recession since 2003, according to Bureau of Labor Statistics data. Through October 2025, employers announced 1.1 million job cuts—a 65% year-over-year increase from 665,000 cuts through October 2024.

Worker Anxiety Rises Amid Uncertainty

The layoff surge is heightening anxiety among American workers navigating an uncertain employment landscape. According to labor market analysts, more than half of workers now expect layoffs to increase throughout 2026, while only 43% plan to look for new jobs this year—down from 93% who expressed such intentions in 2025.

Desmond Lachman, senior fellow at the American Enterprise Institute, identified two overarching concerns driving pessimism about 2026’s labor market.

“The first is the likely overall state of the U.S. economy. The second is the increased pace at which the application of artificial intelligence is likely to displace white collar workers.”

Some economists dispute characterizations of AI as the primary driver. Daniel Hamermesh, emeritus professor of economics at the University of Texas at Austin, called concerns about AI-related job cuts “grossly overblown” while acknowledging the current economic climate provides no reason to expect labor market strengthening in 2026.

Federal Reserve Faces Confounding Policy Choices

The layoff data arrives as the Federal Reserve navigates contradictory economic signals. Inflation remains above the Fed’s 2% target at 2.7%, arguing for continued high interest rates. Conversely, the weakening labor market traditionally would argue for rate cuts to stimulate hiring.

The Federal Open Markets Committee left rates unchanged at a range of 3.5% to 3.75% in January, with most officials wanting to assess how three late-2025 rate cuts filter through the economy. The FOMC’s post-meeting statement shifted language about the labor market, describing it as facing “less downside risks”—suggesting officials see stabilization signals despite elevated layoff announcements.

Market analysts expect the Fed to hold rates steady through spring 2026, with potential cuts beginning in June if labor market deterioration doesn’t accelerate rapidly. The central bank appears to be prioritizing inflation control over employment concerns, particularly given potential inflationary effects from new tariffs.

Job Openings Decline Adds To Concerns

Separate data from the Bureau of Labor Statistics showed job openings fell sharply in December to 6.54 million—a decline of 386,000 monthly and down more than 900,000 from October levels. Openings now sit at their lowest point since September 2020.

The decrease put the ratio of available jobs to unemployed workers at 0.87 to 1, down dramatically from more than 2 to 1 at the mid-2022 peak when employers struggled to fill positions during the post-pandemic hiring boom.

Economists forecast the upcoming January employment report will show approximately 60,000 jobs added with unemployment steady at 4.4%. Whether weakness in hiring represents a temporary plateau or signals deeper deterioration has become a central question dividing Federal Reserve officials on future rate policy.

Do elevated layoff announcements and collapsed hiring intentions signal the end of the “low-hire, low-fire” equilibrium, or will the disconnect between announced cuts and actual unemployment claims continue to cushion labor market impact?

Sources

This report was compiled using information from CNBC’s coverage of the Challenger report, CNN’s reporting on January job cuts, UPI’s layoffs analysis, Yahoo Finance, Benzinga’s AI impact analysis, ABC News coverage, Marketplace radio reporting, TimetrEx analysis, Stanford SIEPR policy brief, TheStreet’s worker anxiety coverage, and Fox Baltimore labor market reporting.

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