October 2025 has entered the record books for all the wrong reasons. According to a series of reports from Challenger, Gray & Christmas, one of the largest outplacement firms in the United States, layoffs last month soared to levels not seen in over two decades. Employers across the country cut more than 153,000 jobs—marking the worst October for layoffs since 2003, and the highest for any single month in the fourth quarter since the financial crisis of 2008. The numbers are not just eye-catching; they’re alarming, with a 183% jump from September’s already significant 54,000 job cuts.
The Challenger, Gray & Christmas report, as cited by Reuters, underscored that “some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes.” Andy Challenger, the firm’s chief revenue officer, added, “October’s pace of job cutting was much higher than average for the month. Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market.”
Year-to-date figures paint a similarly grim picture. By the end of October 2025, job cuts had reached 2,304,755—the highest level since the pandemic’s first year. This represents a 65% increase from the 664,839 layoffs announced during the same period in 2024. The surge is even more pronounced when compared to last October: layoffs have risen 175% year-over-year, totaling 153,074 cuts in the month alone.
Digging deeper into the numbers, the government sector has seen the most dramatic rise in layoffs. In 2025, approximately 300,000 government jobs were cut, a staggering leap from 37,746 in 2024. The main culprit? The so-called “DOGE Impact”—a reference to President Donald Trump’s Department of Government Efficiency (DOGE). This newly established department has been cited in 293,753 planned layoffs so far this year, including both direct government workforce reductions and cuts to contractors. An additional 21,000 job losses have been attributed to “DOGE downstream impact,” which refers to reduced federal funding for private and non-profit entities.
But it’s not just the public sector feeling the pinch. Technology companies have led private-sector job losses, with 33,281 tech layoffs in October alone—up sharply from 5,639 in September. Retailers and the services sector followed closely behind, as rising costs, shifting consumer behavior, and widespread store closures forced companies to slash their payrolls. Warehousing, too, saw a dramatic increase: 47,878 job cuts in October, compared to just 984 the previous month. Over the course of 2025, the warehousing sector has announced more than 90,000 job cuts, a 378% increase from last year.
“Like in 2003, a disruptive technology is changing the landscape,” Challenger, Gray & Christmas noted in their report, drawing a parallel between today’s artificial intelligence revolution and the tech-driven upheaval of the early 2000s. In October 2025, cost-cutting was the number one reason for layoffs, responsible for 50,437 announced cuts. Artificial intelligence adoption wasn’t far behind, causing 31,039 layoffs in the month and 48,414 for the year. The report explained, “The surge suggests ongoing overcapacity and automation-driven restructuring following pandemic-era growth.”
Other industries have not been immune. The media sector experienced a 26% increase in job cuts in 2025. Companies that had previously avoided announcing layoffs in the fourth quarter—wary of negative publicity during the holiday season—seem to have abandoned that caution. “Over the last decade, companies have shied away from announcing layoffs in the fourth quarter, so it’s surprising to see so many in October,” the report observed. The rise of social media, it noted, had made it easier for workers to share their experiences, discouraging companies from delivering bad news near the holidays. That trend, it seems, has been upended by the current economic climate.
Retailers, meanwhile, are bracing for a challenging holiday season. The National Retail Federation (NRF) forecasts that seasonal hiring will be the weakest in 15 years, with retailers expected to add between 265,000 and 365,000 seasonal workers. This reflects what the NRF describes as “a softening and slowing labor market.” Both consumers and retailers are feeling the squeeze from tariffs, too. LendingTree’s analysis shows that shoppers will shoulder $28.6 billion in tariffs this holiday season—an average of $132 per person—while retailers are set to absorb $12 billion in additional costs.
Yet, in a twist that defies the gloomy mood, Americans continue to spend. Despite consumer sentiment sitting at historically low levels, holiday sales are forecast to increase between 3.7% and 4.2% from last year, pushing seasonal spending to the $1 trillion mark for the first time ever. In 2024, holiday spending rose 4.3% from 2023, reaching $976 billion. This paradox—rising layoffs and persistent spending—has left economists scratching their heads. Are consumers simply refusing to let bad news dampen their spirits, or are they dipping into savings and credit to keep up appearances?
The absence of official government economic data, due to what has become the longest government shutdown in U.S. history, has only made the picture murkier. Investors and policymakers are turning to private sources like Challenger, Gray & Christmas for clues about the true state of the labor market. As Reuters reported, “Any economic data from private sources will be on investors’ radar as official data continues to be absent.”
The reasons behind the spike in layoffs are complex. Some industries are still unwinding the hiring sprees that followed the pandemic, while others are grappling with the disruptive force of artificial intelligence and automation. Overcapacity, shifting consumer habits, and the need to cut costs in an uncertain economic environment have all played a role. “Not only did individual companies announce large layoffs in October, but a higher number of companies announced job cut plans,” Challenger noted, pointing out that nearly 450 individual job cut plans were tracked in October, compared to under 400 in September.
For workers, the outlook is daunting. Those who lose their jobs are facing a tougher time finding new employment, as hiring freezes and corporate caution ripple across the economy. The effects are likely to be felt well into 2026, especially if the government shutdown drags on and economic uncertainty persists.
As the U.S. heads into the holiday season, the labor market’s harsh reality stands in stark contrast to the festive spirit. With layoffs at a two-decade high and no end in sight to the government shutdown, both businesses and workers are left to navigate a landscape shaped by rapid technological change, fiscal tightening, and a consumer base determined—but perhaps unable—to spend its way through the storm.
