The U.S. labor market is flashing contradictory signals as 2025 draws to a close. Weekly unemployment claims remain near multi-year lows, even as companies announce the highest number of planned job cuts since the pandemic. The gap between what official data shows and what workers are experiencing is widening, with nearly 1.2 million layoffs announced this year and a growing share of Americans bracing for tougher times ahead.
Mixed Signals in a Cooling Labor Market
Initial jobless claims fell to 191,000 for the week ending November 29, the lowest reading since September 2022, suggesting relatively strong job stability on the surface. At the same time, employers announced 71,321 planned layoffs in November, up 24% from a year earlier and marking the highest total for that month since 2022.
Through November, employers disclosed 1,170,821 planned job cuts, a 54% increase from 2024, according to Challenger, Gray & Christmas data released December 4. That makes 2025 the worst year for announced layoffs since 2020. Roughly 1 in 135 U.S. workers has been targeted in these formal reduction plans, although many have not yet appeared in unemployment figures because severance packages often delay claims for weeks or months.
October’s numbers foreshadowed this turn. Companies announced 153,074 layoffs in October, the highest October total since 2003, based on Challenger’s November 6 report. While this drew limited attention at the time, it signaled a shift toward broader restructuring that November’s data has now reinforced.
DOGE Mandates, AI, and Other Drivers of Job Cuts
One government initiative stands out as a major force behind this year’s layoffs. The Department of Government Efficiency (DOGE) has driven the largest single block of cuts in 2025. Federal agencies reported 293,753 layoffs tied to DOGE, alongside 20,976 cuts among contractors and nonprofits linked to the same push, for a combined impact of more than 314,000 jobs. This single policy accounts for nearly one-quarter of all announced job cuts so far this year.
Across the economy, companies cited four main reasons for layoffs in November. Restructuring plans accounted for 20,217 cuts, as firms continued to unwind earlier expansions and reorganize operations. Market conditions drove 15,755 reductions, reflecting softer demand even as equity markets remain strong. DOGE-related efficiency measures dominated federal and related cuts. And artificial intelligence was explicitly blamed for 6,280 job losses in November alone, marking a notable shift in how employers describe automation’s role.
If that AI-related pace continued over a full year, it would translate into roughly 75,000 job cuts explicitly tied to automation. For the first time at this scale, companies are openly presenting AI as a direct replacement for human roles, making technological displacement a visible factor in workforce planning rather than a theoretical future concern.
Nonprofits, Small Businesses, and Sector Weakness
The strain is not limited to large corporations and federal agencies. Nonprofit organizations reported 28,696 job cuts through November, a 409% increase from 5,640 over the same period in 2024. Many of these groups rely on donations and public funding, both of which are under pressure. Funding constraints, donor fatigue, and government spending reductions are forcing organizations that provide essential local services to shrink their staff.
Small and medium-sized businesses are also feeling the pinch. Payroll processor ADP reported a loss of 32,000 private sector jobs in November, concentrated among smaller firms with less financial cushion. Unlike large technology or telecom companies, which can sometimes cut jobs while retaining output through automation or efficiency gains, reductions at smaller businesses often translate directly into fewer services and reduced operating capacity on local main streets.
Industry-specific data from November reinforces the breadth of the slowdown. Telecom companies announced 15,139 job cuts, while technology firms reported 12,377, despite strong stock performance in many of these companies. Food companies announced 6,708 cuts, raising concerns about weakening consumer demand heading into the holiday season and the potential for ripple effects through restaurants, suppliers, and distributors.
Hiring Plans Shrink as Workers Grow Anxious
Even as layoffs rise, hiring projections are moving in the opposite direction. Employers announced plans for 497,151 hires through November, down 35% from 761,954 over the same period in 2024, Challenger data shows. Rather than aggressively replacing departing employees, many firms appear to be relying on attrition to reduce payrolls more quietly, limiting the immediate impact on unemployment claims while still shrinking their workforces.
This backdrop is feeding rising public unease. The University of Michigan’s November 2025 consumer survey found that 69% of Americans expect unemployment to increase, double the share from a year earlier and comparable to sentiment levels seen during the pandemic. Despite low weekly claims, worker anxiety and expectations of job loss are climbing, which can in turn dampen spending and hiring.
Meanwhile, official statistics may not yet fully reflect the scale of the changes. Severance arrangements often postpone unemployment filings by two to three months, meaning that many of the 1.17 million announced job cuts for 2025 have yet to appear in weekly claims data. Analysts expect a more visible impact in the first quarter of 2026, when claims could rise toward 300,000 per week as these delayed filings accumulate.
The Road into 2026
With half a month remaining in the year, analysts anticipate that December could add more than 100,000 additional layoffs, further cementing 2025 as the most severe year for announced job cuts since 2020. The concentration of reductions across government, nonprofits, small businesses, technology, telecom, logistics, and consumer-facing industries suggests interconnected pressures rather than isolated sector weakness.
The official employment report due December 16 is expected to offer a clearer real-time picture of whether job creation is keeping pace with these cuts or beginning to fall behind. Upcoming job openings data will also indicate whether the tight labor market that characterized earlier stages of the recovery is easing, leaving displaced workers with fewer options to find new positions.
As markets hover near record highs and companies seek efficiency gains, the coming months will test how resilient the labor market remains once severance periods expire and announced cuts filter fully into unemployment statistics. The trajectory of consumer confidence, hiring plans, and layoff follow-through in early 2026 will help determine whether the current adjustment remains a controlled slowdown or evolves into a broader downturn for American workers and businesses.
Sources:
Challenger, Gray & Christmas – National Layoff Reports (November and October 2025)
U.S. Department of Labor – Weekly Jobless Claims Data (November and December 2025)
ADP National Employment Report (November 2025)
University of Michigan Consumer Sentiment Survey (November 2025)
Bureau of Labor Statistics – Job Openings and Labor Turnover Survey (ongoing 2025)