According to a Bloomberg report, American companies announced an alarming 417,500 planned layoffs for the first five months of 2023. This represents a fourfold increase in job cuts compared to 2023, per analysis by outplacement company Challenger, Gray & Christmas.
Apart from early 2020, when the government’s response to the Wuhan virus disrupted the labor market, the total number of projected job cuts through May is the highest since 2009.
Per Challenger’s findings, the bulk of layoffs took place in the tech industry, which announced 136,800 cuts for the first five months of 2023. That figure came close to surpassing the entire year of 2001 when the tech industry announced 168,400 job cuts.
Other sectors such as banking, retail, and media have experienced similar job cuts. Challenger stated that the media industry announced 17,400 layoffs thus far in 2023. Financial firms have conducted 37,000 layoffs through May, over four times the number compared to 2022.
The Federal Reserve’s 14 months of interest rate increases has prompted companies to cut costs. Challenger observed that many firms have carried out hiring freezes owing to projections of a precarious economic situation taking place.
Broad-based job reductions will likely continue as Challenger data shows layoffs rising by 287% on a year-over-year basis.
The outplacement firm reported roughly 3,900 jobs lost due to the proliferation of artificial intelligence. Certain trends point to a significant number of jobs being lost due to AI, which will likely accelerate in the near future. Per a Goldman report, tens of millions of jobs are projected to be lost because of AI in the upcoming years.
The American economy is built on a house of cards. The combination of a vast regulatory state and easy money ensures that the American economy will be perpetually unstable and only serve the interests of oligarchical groups, while Middle America continues to get hollowed out.
Only genuine free-market reforms such as abolishing the Fed and downsizing the regulatory state will restore economic normalcy in the United States.