As the United States grapples with low job growth and anxieties surrounding a potential recession, companies in North America are embarking on layoff drives, impacting thousands of employees across the US and Canada. This trend reflects a broader effort by businesses to optimize operations, but it simultaneously exacerbates unemployment concerns in both countries. These layoff announcements are likely to lead to decreased disposable incomes and savings, adding to the economic challenges faced by individuals and families.
Warning signs of a potential recession are becoming increasingly evident. Last week, the US government reported a sharp decline in hiring and a rise in the unemployment rate for the fourth consecutive month. According to the US Department of Labor, the US economy added 114,000 fewer jobs in July, falling short of expectations by approximately 35 percent. The report also revealed an increase in the US unemployment rate to 4.3 percent.
In Canada, a similar trend is unfolding. Reuters reported that approximately 2,800 jobs were lost in July, marking the highest unemployment rate in over two and a half years. This continues a trend of job losses, with July being the second consecutive month of negative job growth. The unemployment rate reached a 30-month high of 6.4 percent.
The scale of job cuts announced this year is significant. According to Reuters, over 50,000 job cuts have been announced so far. However, the actual number is likely much higher due to the fact that many companies have not disclosed specific figures, instead opting to provide percentages of job cuts.
Among the notable companies announcing job reductions are Amazon, which stated it would cut between 5 and 35 percent of jobs in various divisions. Intel and Paramount have both announced plans to cut 15 percent of their workforce. Electric vehicle manufacturers Tesla and Lucid have also joined the trend, with Tesla planning to cut 10 percent and Lucid announcing a 6 percent reduction in staff. Additionally, BlackRock will reduce its workforce by 3 percent, and Levi Strauss & Co. plans to cut between 10 and 15 percent of its employees.
Beyond these percentages, several companies have disclosed specific figures for their job cuts. Citi Bank will eliminate 20,000 jobs over the next two years. PayPal plans to cut 2,500 jobs, while Bell Canada will reduce its workforce by 4,800. British media group Sky is laying off 1,000 employees, and Microsoft-owned Activision Blizzard plans to cut 1,900 jobs. UPS is eliminating 12,000 positions, and FedEX is reducing its workforce by an estimated 1,700 to 2,000 employees. It is important to note that this is not an exhaustive list, and further announcements of job cuts are expected.
Amidst these job cuts and the slowing pace of job growth, concerns about a recession in the United States are mounting. One economist has suggested that the American middle class has effectively been experiencing a recession for some time, and now the recession is reaching Wall Street.
In a separate analysis, JP Morgan has raised its assessment of the likelihood of a recession in the United States later this year to 35 percent, up from the previous estimate of 25 percent. The forecast for next year is even more pessimistic, with the probability of a recession in the second half of 2025 pegged at 45 percent.
Stephanie Pomboy, President of Macro Mavens, has stated that the United States is witnessing the beginning of an economic “reckoning.” She believes that Wall Street is finally catching up to the recession that has already been impacting consumers for a while. In an interview with Fox Business, Pomboy remarked, “There’s a lot of pain ahead of us…Middle America has been in recession for a long time. And again, Wall Street has kind of ignored it. But I think that’s all starting to catch up now, and the payroll report really focused attention in a way that Wall Street could no longer ignore.”
The combination of job cuts, slowing job growth, and rising warnings of a recession paints a concerning picture for the North American economy. The impact of these layoffs on individuals and families, as well as the potential for a wider economic downturn, remains a significant source of concern.
