A new jobs report showing massive layoffs in February has sparked concern, with some experts blaming former President Donald Trump and Elon Musk for the worst job losses since the 2009 economic crash. CNBC’s Steve Liesman stated that both Trump and Musk played a major role in contributing to the recent surge in layoffs.
Liesman pointed out that Trump and Musk have been cutting government jobs, which has added to the strain on the economy. He also mentioned that Trump’s trade policies have hurt the stock market, leading to widespread uncertainty about the jobs report. As a result, expectations for the report were already mixed.
This news follows a report from Challenger, Gray & Christmas, which revealed that job cuts had increased by an alarming 245% from January to February. This marks the highest increase in job losses for February since 2009.
Andrew Challenger, Vice President of the firm, explained that the job cuts weren’t limited to the federal government. Private companies, especially in retail and technology, also announced significant layoffs. He pointed to factors such as changes in government policies, canceled government contracts, concerns over trade wars, and bankruptcies as key contributors to the rise in layoffs.
“Private companies announced plans to shed thousands of jobs last month, particularly in Retail and Technology. With the impact of the Department of Government Efficiency [DOGE] actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies, job cuts soared in February,” Challenger said.
In a segment on CNBC’s Squawk Box, host Andrew Ross Sorkin asked Liesman about the potential impact of what’s being called the “DOGE effect” on the upcoming jobs report. Liesman explained that the story is complex, but he highlighted the significant rise in layoffs.
“It’s a tricky story here,” Liesman said. “But first, let me tell you, February layoffs surged by 245%, reaching the highest level since the pandemic. The Trump administration’s efforts to reduce the federal workforce played a major part in this. According to Challenger Gray & Christmas, announced layoffs reached 172,000 in February, up from 49,000 in January. This is the highest monthly number since July 2020, and the worst February since 2009.”
Liesman further elaborated that these layoffs came from both the public and private sectors. “It was a mix of layoffs from the government and the private sector, including government at 63,000 announced. That includes federal workers and private government contractors. Retail 45,000 hit by cold weather, and tech 22,000 with HP, Meta, and Workday among the tech giants we know that announced February layoffs.”
He continued, noting that the DOGE effect was the main reason for the job cuts, followed by market conditions and bankruptcies. “The DOGE impact was the top reason cited for job cuts, followed by market and economic conditions and then bankruptcy.”
Liesman explained that the government job cuts might not appear in the jobs report immediately, as workers are not counted as unemployed until their severance runs out. “The bulk of government job cuts are likely too recent to show up in tomorrow’s jobs report. Workers won’t be counted as unemployed until their severance runs out,” he said.
Liesman also noted that about 30,000 federal workers typically leave their jobs every month, and with the hiring freeze Trump imposed at the start of his presidency, those positions may remain vacant. “That could create some negative numbers that could drag down the headline number even as soon as tomorrow,” he added.
Research from Evercore ISI suggests that job losses due to the DOGE effect could range from 50,000 to 660,000, depending on how the government handles hiring and its policies moving forward. “DOGE related uncertainty over contraction grants could have an additional paralyzing effect on hiring at employers exposed to those funding sources, or in need of regulatory approvals from agencies that are themselves paralyzed by DOGE review,” the research noted.
Most economists expect job losses to fall somewhere between 250,000 and 350,000, with federal job losses accounting for roughly 20,000 to 30,000 of that total. While this would represent a noticeable drop in employment, the long-term impact will depend on whether the private sector can absorb these workers. “The ultimate economic impact depends on whether the private sector finds jobs for those workers, and can make up for those job losses,” Liesman concluded.
