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Key Takeaways

• Layoffs announced by employers more than tripled in February from January, driven largely by layoffs of federal workers.
  

• The 172,017 job cuts in February were the most since July 2020 and the most for any February since 2009.
  

• The surge in job cuts showed that the Department of Government Efficiency's mass firing of federal workers is affecting the economy, though not yet at a large enough scale to push up the unemployment rate.
  

Mass firings of federal workers propelled layoffs to their highest in more than four years by one measure.

In February, employers announced 172,017 job cuts, the most since July 2020 and the most for any February since 2009, consulting firm Challenger, Gray & Christmas said in a report Thursday. The increase in layoffs from 49,795 in January can be largely attributed to 62,530 job cuts at 17 federal agencies tracked by Challenger.

The report is an early sign of the impact of Elon Musk and the Department of Government Efficiency's efforts to layoff workers and cancel contracts across the federal government in a cost-effort. The total effect on the job market is uncertain partly because many of the firings have been challenged in court, some successfully.

Some economists don't expect the DOGE layoffs to dent the overall labor market much or drive up the unemployment rate, at least not as soon as February, due to the relatively small size of the federal workforce.

However, the layoffs could have a ripple effect, especially if key government services are disrupted and companies that contract with the federal government also start to lay off workers. Challenger identified 894 job losses "downstream" of the DOGE cuts, including at nonprofit groups that lost federal funding.

Unemployment claims fell last week after spiking the previous week, according to a separate government report released Thursday. There were 221,000 unemployment claims filed last week, down from 242,000 the week before, the Department of Labor said.

Economists at Moody's Analytics expect laid-off federal workers will push those numbers up as the DOGE campaign continues. Moody's projects the federal workforce will shrink by 400,000 over the next four years from its current level of 3 million due to DOGE's campaign and budget cuts planned by Republican lawmakers.

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