Goldman Sachs researchers are warning that the US labor market may be starting to soften as private-sector data show a growing wave of layoffs across several industries, the Wall Street bank said in a new report.
The firm said state filings related to planned mass layoffs have surged to their highest level since 2016, excluding the pandemic spike — the sharpest increase Goldman has tracked in nearly a decade.
Layoff announcements compiled by Challenger, Gray & Christmas, a firm that tracks corporate job cuts, had by October climbed to a level previously unseen outside of a recession, the report noted, citing cuts in sectors like tech, industrial goods, and food and beverage as factors that drove the increase.
Goldman’s economists said the combination of rising layoff signals is concerning — representing “growing signs of weakness” — because workers are increasingly struggling to secure new employment, making rebounding after losing a paycheck especially difficult.
Even some of corporate America’s biggest names haven’t evaded the job market’s cooling. Amazon, for example, announced plans this fall to eliminate about 14,000 corporate jobs as it seeks to streamline and embrace AI.
“A sustained increase in layoffs would be particularly concerning because the hiring rate for workers is low and it is harder than usual for the unemployed to find jobs,” economists Manuel Abecasis and Pierfrancesco Mei wrote.
Decade-high layoff signals
The state filings Goldman cited — known as Worker Adjustment and Retraining Notification, or WARN, notices — are required by companies with more than 100 employees in advance of instituting layoffs. They’re a helpful indicator of employer behavior, signaling when cuts may be around the corner.
On top of the rise in WARN notices, the bank found that the leadership of more publicly traded companies had begun openly discussing potential layoffs on recent earnings calls with shareholders. Taken together with the Challenger outplacement data, the picture strongly suggests more companies are considering trims and efficiencies in the coming months.
Still, the bank said weekly jobless claims remain low, which means government reports might not yet reflect the full extent of deterioration in the labor market. A recent Bureau of Labor Statistics jobs report for September surpassed economists’ expectations.
But Goldman noted that claims tend to lag private layoff trackers by about two months, which could hint at a potential uptick in federal data about job losses as winter continues.
And although concerns have grown about whether artificial intelligence is pushing companies to reduce headcount, Goldman said current evidence does not show that AI is meaningfully driving the latest layoffs.
“While AI may be increasingly considered in workforce decisions,” the Goldman researchers wrote, “clear evidence of layoffs directly motivated by AI remains limited.”
