Feb 2, 2024 - Economy

Why you don't need to freak out about the layoffs

U.S. layoffs and discharges
Data: Bureau of Labor Statistics, Fred; Chart: Axios Visuals

The stories about layoffs in media and tech are starting to make people freak out a bit over the health of the economy. But taking a step back, the high-level economic data isn't so worrying.

The big picture: The job market is cooling, but it's still pretty strong.

State of play: Stories about tens of thousands of workers at high-profile media and tech companies losing their jobs get attention but they're not part of a bigger explosion in firings.

  • Context: Typically, there are around 1.5 million layoffs a month in the U.S. If you look at the government data in the chart above you can see that they've been trending slightly upward, but are still at historically low levels.
  • Almost all of those layoffs and firings did not get a big headline.

By the numbers: The number of people filing unemployment claims ticked up slightly to 224,000 for the week ending Jan. 27, according to data out Thursday. That's a pretty low number, slightly higher than at the height of the 2022 jobs boom but still low by historical standards.

  • This data is one of the best bits of high-frequency information we have on job loss.
  • Other indicators show slight increases, too, but aren't rising to worrying levels. There were 82,307 job cuts reported in January, according to a tally from Challenger, Gray & Christmas out Thursday — that's higher than last month, but 20% lower than the same time last year.

Flashback: Worries that unemployment would rise happened this time last year, too, when tech layoffs spiked — but ultimately the labor market overall stayed strong.

Zoom out: Tens of thousands of people is indeed a lot of people, "but it is a drop in the bucket compared to the number of people who get laid off every month even in a very strong labor market," says Heidi Shierholz, a former chief economist at the Labor Department and the current president of the progressive Economic Policy Institute.

  • There just aren't any big concerning signs right now in the data, she says. "It's just not there."

Yes, but: That could change. And, if you're in an industry that's seeing more layoffs in the headlines — it is a stressful time.

What to watch: The January employment report will be out Friday morning.

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