Goldman Sachs Highlights Increasing Weakness in the US Job Market Amid Rising Layoffs

According to a recent report from Goldman Sachs, the US labor market may be experiencing a downturn as several industries face a wave of layoffs. The investment bank found that WARN-related layoff filings have surged to their highest level since 2016, not accounting for the pandemic spike, marking the steepest increase in almost a decade. Data from the outplacement firm Challenger, Gray & Christmas indicates that corporate layoff announcements have reached unprecedented levels for non-recession periods, particularly affecting sectors such as technology, industrial goods, and food and beverage. Economists at Goldman expressed concern over the combination of rising layoff signals, which suggest 'growing signs of weakness,' as it becomes increasingly challenging for workers to find new employment, making the recovery from job loss particularly difficult. Notably, major corporations like Amazon have announced significant job cuts, citing the need for efficiency and adaptation to AI technologies. The WARN notices, which are mandatory for larger companies prior to layoffs, serve as a crucial indicator of impending employment reductions. In addition to the uptick in WARN filings, the leadership of many publicly traded companies is now openly discussing potential layoffs during recent earnings calls. Despite a rise in layoff signals, weekly jobless claims remain low, implying that government reports may not yet capture the full extent of the labor market decline. Goldman advises that claims typically lag behind private layoff indicators by approximately two months, suggesting that federal data on job losses may rise in the coming winter months. Moreover, while there are rising concerns regarding the impact of artificial intelligence on workforce reductions, current evidence does not support the notion that AI is a primary driver of the recent layoffs.