“Payroll gains have weakened this year, and employment may well be shrinking already,” Federal Reserve Governor Chris Waller warned recently. His words tap into an emerging anxiety across corporate America, which has seen layoffs reach recessionary levels in October, at 1.1 million job cuts so far in 2025, the highest since the pandemic recession.
1. A Historic Spike in Layoffs
Data from Challenger, Gray & Christmas shows that employers announced more than 153,000 job cuts in October alone-a 183 percent increase over September. This is the worst October for layoffs since 2003. Cuts at UPS, Amazon, and Target dominate headlines, with UPS eliminating 48,000 roles and Amazon potentially trimming 30,000. John Challenger, the firm’s CEO, noted, “We haven’t seen mega-layoffs of the size that are being discussed now since the recession of 2009.”
2. AI and cost-cutting drive reductions
Employers blame A.I. and cost-cutting for the cuts. Technology companies have cut more than 141,000 jobs this year, or 17 percent from 2024. Indeed’s Laura Ullrich said automation has replaced routine professional work in areas like media, software development, and marketing. But Wharton’s Peter Cappelli warned, Some may also be engaging in a little bit of ‘A.I.-washing’ laying people off and blaming the technology, when deeper financial or strategic missteps are the problem.
3. Sector-wide Impact
Retail, warehousing, and the service industries are experiencing steep declines in staffing. UPS is shuttering 93 buildings and cutting its fleets of vehicles and aircraft, while Target is undertaking the elimination of hundreds of open roles. Starbucks, Meta, Intel, and Nestle have announced big cuts related to slowing sales, restructuring, or overinvestment in capacity.
4. Federal Reserve’s Policy Shift
Interest rates have now been cut twice in six weeks as the Federal Reserve lowered its benchmark rate to a range of 3.75% to 4%. Chair Jerome Powell cited “downside risks” to employment. “We’re watching that very carefully,” he said, adding that although inflation remains above target, the Fed is prioritizing job protection. The government shutdown has muddled things further, depriving policymakers of official labor data.
5. Historical Patterns and Recovery Timelines
Historically, a spike in layoffs to this extent has marked recessions recoveries have taken different lengths of time. During the Great Recession, job losses peaked in 2009, then gradually worked their way back over several years. During the pandemic recession, the rebound was sharper because of stimulus measures. Economists caution that if robust policy intervention does not take place, this slowdown may follow a longer arc of recovery.
6. Psychological Toll on Workers
The stress for those affected is immediate and profound. Job loss can wear away at self-esteem, disrupt social networks, and strain family relationships. Understandably, experts generally advise giving oneself permission to grieve, contesting negative thoughts, and avoiding unhealthy coping behaviors. Writing about one’s feelings and accepting reality may help ease the emotional burden.
7. Building Resilience During Unemployment
Resilience strategies also include reaching out to supportive friends, joining job clubs, and expanding networks beyond the workplace. Involving the family in the process can strengthen bonds and reduce isolation. Routines, hobbies, and volunteering may provide ways to redefine identity beyond employment.
8. Keeping the Body and Mind Healthy
Exercise, even in short bursts, helps elevate mood and diminish stress. A diet rich in omega-3s supports mental clarity, and avoiding too much sugar, caffeine, and alcohol can stabilize energy. Adequate sleep and other relaxation techniques, such as meditation or yoga, are important for maintaining focus during the job search.
9. Positive and Strategic
Treating the job search like a job complete with start and end times helps maintain discipline. Breaking goals into manageable steps and focusing on controllable actions, such as learning new skills or networking, keeps momentum alive. Listing personal strengths and revisiting past successes can counteract discouragement.
10. The Short-Term Reality of AI
AI’s long-term promise includes productivity gains and possibly lower inflation, but experts such as Ed Elson emphasize the immediate impact “It is decimating white-collar information work, and reducing entry-level opportunities for young people.” Companies are investing heavily in AI infrastructure, with Amazon projected to spend $125 billion in capital expenditures this year, shaping future hiring needs. The path forward, as layoffs mount and the Fed works to stabilize the labor market, is going to depend on how quickly displaced workers can adapt-and how effectively policymakers and businesses balance technological change with human employment.
