The push by President Donald Trump to shrink the federal workforce has had a significant impact on the labor market in February, according to a new report from outplacement firm Challenger, Gray & Christmas released on Thursday (March 6).
The report revealed that US employers announced 172,017 job cuts last month, a staggering 245% jump from January, marking the highest monthly total since July 2020, when the Covid-19 pandemic sent shockwaves through the economy. It was also the worst February for layoffs since 2009, in the aftermath of the global financial crisis.
A major contributor to the spike was federal job cuts, with 62,242 layoffs across 17 government agencies, largely driven by Trump-backed plans championed by billionaire Elon Musk to aggressively reduce the size of the federal workforce.
“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, said in the release.
According to a CNBC report, the sharp cuts in February pushed the year-to-date total to 221,812 job losses, the highest for the first two months of any year since 2009 and a 33% increase compared to the same period in 2024.
The troubling report lands amid growing uncertainty over the state of the economy, as Trump’s plans for higher tariffs, deep government cuts, mass deportations and tougher immigration rules continue to unfold.
The broader economic picture remains mixed. Consumer confidence surveys highlight growing anxiety over inflation and job security, while some economic indicators show resilience. Private payroll processor ADP reported just 77,000 private sector hires in February, signaling a slowdown.
Layoffs weren’t limited to the government sector. Retail companies, including household names like Macy’s and Forever 21, accounted for 38,956 job cuts in February, making retail layoffs nearly six times higher than a year ago. Tech companies also announced 14,554 job reductions, though the sector is actually cutting fewer jobs compared to early 2024.
There was a silver lining: employers announced plans to hire 34,580 new workers in February, a 159% increase from the previous year.
Initial unemployment claims have also ticked up, especially in Washington DC, which is home to a significant portion of federal workers affected by the ongoing government downsising.