U.S. President Donald Trump’s initiatives to reduce the federal government workforce have made a significant impact on the labor market in February, with reported job cuts reaching their highest level in nearly five years, according to outplacement firm Challenger, Gray & Christmas.
The firm disclosed that U.S. employers announced 172,017 layoffs for the month, marking an increase of 245 percent from January and the highest monthly total since July 2020, during the heightened uncertainty stemming from the Covid pandemic. Additionally, this figure represents the largest total for February since 2009, amid the global financial crisis.
Job cuts and federal workforce reduction
More than one-third of the total layoffs originated from billionaire entrepreneur Elon Musk’s initiatives, supported by Trump, to decrease the federal headcount. Challenger reported that the total number of announced federal job cuts reached 62,242, affecting 17 agencies.
“With the impact of the Department of Government Efficiency [DOGE] actions, as well as canceled government contracts, fear of trade wars, and bankruptcies, job cuts soared in February,” Andrew Challenger, the firm’s workplace expert, stated in the release.
Record layoffs for the beginning of the year
January’s planned reductions brought the cumulative total for the first two months of the year to 221,812, which is also the highest for this period since 2009 and up 33 percent compared to the same timeframe in 2024. This report surfaces amid growing apprehension regarding the state of the labor market and the economy at large, as Trump’s strategies for tariffs, downsizing government, mass deportations, and strict immigration restrictions begin to materialize.
Read more: U.S. adds 143,000 jobs in January as unemployment rate slips to 4 percent
Mixed signals from the labor market
There has been an array of mixed signals about the future direction of the economy, with consumer surveys reflecting worry over inflation and layoffs, while other data indicates ongoing economic resilience. Payroll processing firm ADP reported on Wednesday that private sector hiring increased by only 77,000 in February.
Sector-specific cuts in the labor market
According to the Challenger report, the trend of cutbacks is not limited to government sectors. Retail experienced 38,956 layoffs for the month, as companies such as Macy’s and Forever 21 announced significant staff reductions. The cuts in the retail sector for 2025 are nearly sixfold higher than those recorded in 2024. Technology firms also reported an additional 14,554 layoffs, though this sector’s reductions are lower compared to a year ago.
Positive hiring news amidst layoffs
On a more optimistic note, companies announced plans in February to hire a total of 34,580 new employees, bringing the year-to-date total up 159 percent from the previous year. Initial unemployment claims have shown an uptick in recent weeks, particularly in Washington, D.C., which has a substantial number of government workers.
