A Wave of 500,000 Layoffs in 2025? Elon’s DOGE Is Eroding the Core of the Economy

TradingKey - The large-scale layoffs carried out by the US Department of Government Efficiency (DOGE) led by Elon Musk are eroding the US job market in 2025.The total number of layoffs is expected to reach 500,000 by the end of this year.

Several employment indicators this week have been relatively weak, prompting Wall Street to reassess whether the labor market can remain as robust as it was in 2024 this year.

• The ADP employment data for February in the United States, released on the 5th,  plummeted to 77,000—far lower than the expected 140,000 and the previous figure of 183,000. 
• The number of job cuts announced by Challenger, Gray & Christmas on the 6th surged by 245% compared with January, reaching 172,017. This marks the highest since the COVID-19 pandemic in July 2020 and the highest February figure since the 2009 financial crisis.

Challenger noted that about one-third of the layoffs that month resulted from the the DOGE department's reduction of federal government employees, with 62,242 workers from 17 federal agencies were laid off.

Institutions such as Barclays and Evercore ISI predict that by the end of 2025, the total number of layoffs in the United States could exceed 500,000, accounting for one-fourth of the new jobs added in 2024.

Investors are closely monitoring the Nonfarm Payrolls (NFP) report to be released on the 7th. The market anticipates 170,000 new jobs, with the unemployment rate is expected to remain stable at 4%. 

Bank of America stated that the impact of government layoffs on February's employment data may not be significant, with the negative effects likely to become more apparent after March.