The news is filled with layoffs at tech companies, McDonald’s, GM, Ford and several other large American companies. Yet, U.S. unemployment has hovered around a 50-year low of 3.5% or so. Very few people, even economists, can make sense of this. (These companies are planning the biggest mass layoffs this year.)
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However, a very small number of industries have not been spared at all. Indeed, job cuts became very brutal recently. According to Challenger, Gray & Christmas, the March layoff figure was 89,703, up 319% from the same month a year ago. Additionally, employers announced 270,416 cuts in the first quarter, a 396% increase from the same period in 2022.
“We know companies are approaching 2023 with caution, though the economy is still creating jobs. With rate hikes continuing and companies’ reigning in costs, the large-scale layoffs we are seeing will likely continue,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas.
Tech layoffs totaled 102,391, which is a remarkable percentage of the total. Many of these likely are from Meta and Amazon. Although these companies are huge, profitable and cash rich, they see a slowing economy and want to maintain their margins. Notably, none of these companies has fired its chief executive officer.
According to the Challenger data, the three main reasons for job cuts all have to do with the economy. The reasons mentioned most often are market conditions, cost-cutting and companies closing.
Were these jobs cut too early? It appears the economy is on the mend. The rate of inflation has slowed, although it is not anywhere near the Federal Reserve’s 2% target. In the next few months, it could become clear that there was no recession and one is not coming.
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