There are Growing Signs of Weakness in the US Job Market
While most US official economic data releases have been suspended until recently due to the government shutdown, Goldman Sachs Research’s analysis of alternative measures of US job layoffs suggests the labor market is weakening further.
“A sustained increase in layoffs would be particularly concerning because the hiring rate for workers is low and it is harder than usual for the unemployed to find jobs,” economists Manuel Abecasis and Pierfrancesco Mei write in the team’s report.
Have US layoffs increased?
Private-sector layoff announcements reported by Challenger, Gray & Christmas increased in October to their highest level outside of recession (even after excluding the effect of an announcement of warehouse layoffs that our economists suspect is being partially double-counted). Outside of the large spike in layoffs involving warehousing jobs, the tech, industrial goods, and food sectors accounted for the largest increases in layoff announcements in October.
In addition, Goldman Sachs Research’s real-time tracking of Worker Adjustment and Retraining Notification (WARN), which companies have to file before conducting mass layoffs, has also ticked up, reaching its highest level since 2016 (outside of the initial pandemic surge).
By contrast, initial jobless claims—which are less noisy and more representative but could lag layoff announcements and WARN notices—remain low, Abecasis and Mei write.
Not all US states that Goldman Sachs Research tracks provide industry breakdowns of WARN notices. Our analysts combined machine learning techniques with a large dataset of company names, industries, and states to predict industry classifications for their WARN estimates.
The results suggest that technology companies also accounted for a meaningful increase in Goldman Sachs Research’s measure of overall WARN notices, followed by the manufacturing, healthcare, and food and beverage industries.
Is AI leading to layoffs?
It isn’t yet clear to what extent these layoffs may be a result of companies replacing workers with automation using artificial intelligence (AI), according to Goldman Sachs Research.
“So far, we do not find clear evidence that most of the increase in these measures is directly motivated by AI, even if we see large increases in tech layoffs across both the Challenger and WARN measures,” Abecasis and Mei write. “As our portfolio strategy team noted, only a small number of S&P 500 firms have explicitly referenced AI when discussing large-scale layoffs. Most companies instead point to the need to streamline and restructure operations, sometimes attributing these changes to new technologies that enable efficiency gains.”
“While AI may be increasingly considered in workforce decisions, clear evidence of layoffs directly motivated by AI remains limited,” they add.
Do layoff announcements indicate initial jobless claims will rise?
The job cut announcements captured by Challenger could be released in advance of actual layoffs taking place, and the WARN Act requires companies to notify state governments of plans to lay off workers at least 60 days in advance outside of exceptional circumstances, according to Goldman Sachs Research.
In practice, however, companies might not publicly release details of layoff plans until after they have completed them, and they may not have time to report layoffs to state governments when they are facing difficult business conditions, Abecasis and Mei write.
Goldman Sachs Research also finds that measures of Challenger and WARN notices typically lead initial claims by about two months.
Our economists have, in addition, introduced a tool tracking layoff discussions among publicly listed companies by analyzing earnings call transcripts from firms in the Russell 3000 index. It shows that the share of companies mentioning layoffs has increased recently.
The research also shows that AI has quickly become a central topic in conversations about headcount within the tech sector since November 2022. About half of layoff-focused discussions in the last two reporting quarters in the tech sector have included references to AI.
In other industries, the integration of AI into workforce discussions has progressed more slowly but has accelerated notably in 2025. Companies in finance and real estate—which have reported some of the highest levels of AI adoption—are more likely to mention AI in the context of layoff discussions..
There is typically a lag between the initial appearance of AI in companies’ workforce discussions and the subsequent emergence of layoff conversations, according to Goldman Sachs Research. Layoff-focused discussions become more likely after management teams have referenced AI multiple times in the context of labor during earnings calls.
“This pattern has been evident in the tech sector since 2023, while in other industries it has only begun to emerge recently—suggesting that, outside of tech, AI is just starting to influence companies’ decisions,” Abecasis and Mei write.
This article is being provided for educational purposes only. The information contained in this article does not constitute a recommendation from any Goldman Sachs entity to the recipient, and Goldman Sachs is not providing any financial, economic, legal, investment, accounting, or tax advice through this article or to its recipient. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the statements or any information contained in this article and any liability therefore (including in respect of direct, indirect, or consequential loss or damage) is expressly disclaimed.
Our signature newsletter with insights and analysis from across the firm
By submitting this information, you agree that the information you are providing is subject to Goldman Sachs’ privacy policy and Terms of Use. You consent to receive our newletter via email.