In February, layoffs in the United States surged. The president of the Philadelphia Federal Reserve warned that the economic outlook faces challenges.

Philadelphia Fed President Harker said on Thursday that despite the current good economic situation in the United States, there may be challenges in the future. Harker pointed out in his speech, "The unemployment rate remains low, the economy is still growing, but it faces certain threats. We are starting to see weakening market confidence." He expressed concern that although the inflation rate is declining, this trend is at risk. "I am worried that the downward trend in inflation may be threatened." However, he still expects price pressures to continue to ease. Impacted by the Trump administration's cuts to federal spending and rising economic uncertainties, layoffs in the United States surged in February. According to the latest layoff report released by Challenger, Gray & Christmas on Thursday, US companies announced plans to lay off 172,017 people in the month, an increase of 103% from January, setting the highest February layoff record since 2009. The data shows that this layoff figure ranks 12th in the past 32 years. Of the top 11 months, four occurred during the COVID-19 pandemic, while the rest occurred during periods of economic recession in the United States. These layoffs were mainly concentrated in government departments, with the newly established "Department of Government Efficiency" (DOGE) at the federal government massively cutting budgets, reducing staff, and canceling contracts, leading to a sharp increase in government layoffs. According to Challenger's statistics, 17 federal agencies announced layoffs of 62,242 people, an increase of 41,311% from the same period in 2024 when 151 people were laid off. The impact of DOGE is not limited to the public sector. Due to reduced government funding, some non-profit organizations dependent on government assistance were also affected, leading to an additional 894 job cuts. In addition, the retail industry (layoffs of 38,956 people), the technology industry (layoffs of 14,554 people), and the consumer goods industry (layoffs of 10,625 people) were also affected. "The government layoffs account for one-third of the overall layoffs, which is concerning in itself, and it indicates that employers' attitudes toward the labor market may be changing," said Gregory Daco, chief economist at EY Parthenon. The report cited the main reasons for the layoffs, including DOGE-related policies (63,583 people), company bankruptcies (35,172 people), changes in market or economic environments (28,098 people), and company restructurings (16,828 people). Challenger, Gray & Christmas' Senior Vice President Andrew Challenger said in a statement, "Policy adjustments at the Department of Government Efficiency, canceled government contracts, trade war risks, and corporate bankruptcies have led to a significant increase in layoffs in February." Despite the overall surge in layoffs, the report also brought some positive signals. The data shows that in February, business recruitment plans surged to 34,580 people, setting the highest February recruitment record since 2022. This round of layoff data provides an important reference for measuring the impact of federal government spending cuts on the job market. At the same time, economists are closely monitoring the weekly initial jobless claims data to assess the health of the labor market. According to another report released by the US Department of Labor on Thursday, initial claims for unemployment benefits in the United States decreased by 21,000 to 221,000 last week, indicating that the layoffs are still within the normal range before the pandemic and below historical averages. However, the number of federal employees applying for unemployment benefits has increased. By February 22, the number of applicants in this category reached 1,634, an increase of 1,020 from the previous week. In addition, the latest employment report released by ADP on Wednesday showed a significant slowdown in job growth in the US private sector. In February, private businesses added only 77,000 new jobs, far below the 186,000 in January and lower than the market's expected 142,500. ADP's Chief Economist Nela Richardson said, "We cannot ignore the biggest driver of the economy consumers." Data show that US consumer spending saw its first decline in two years in January and recorded the largest drop since February 2021. The US Bureau of Labor Statistics is scheduled to release the February nonfarm payroll report on Friday. The market generally expects that the US economy added about 160,000 new jobs in February, and the unemployment rate will remain low at 4%. However, as the massive layoffs triggered by DOGE occurred after February 12, it is expected that these layoffs will not have a significant impact on the February employment report. In addition, some federal employees may still be in their paid notice period and will therefore not be counted as unemployed in the short term. Economists expect that the employment reports from March to April may more clearly reflect the impact of government spending cuts on the labor market. Claudia Sham, chief economist at New Century Advisors, said, "The February employment report may reflect the situation of the labor market before the adjustment, while the response to tariffs and policy changes will be evident in the coming months." Due to scheduling issues, the US Department of Labor's Job Openings and Labor Turnover Survey (JOLTS) data will be delayed until next week. Typically, this data is released three days before the nonfarm payroll report to provide a more complete picture of the employment market dynamics.