In its newly released report, Goldman Sachs warned that the U.S. labor market may be starting to soften, as private sector data shows a growing wave of layoffs emerging across multiple industries. Goldman Sachs stated that state-level filings related to planned large-scale layoffs in the U.S. — specifically WARN notices — have surged to their highest level since 2016 (excluding the spike during the pandemic), marking the sharpest increase the bank has tracked in nearly a decade.
The report pointed out that data compiled by Challenger, Gray & Christmas, which specializes in tracking corporate layoffs, shows that corporate layoff announcements have climbed by October to levels not seen outside of recessionary periods. Layoffs in sectors such as technology, industrial products, and food & beverages are the primary drivers.
Goldman Sachs economists said these rising layoff signals are concerning, indicating that signs of labor market weakness are intensifying, as job seekers find it increasingly difficult to secure new positions, and re-employment after job loss has become particularly challenging. Even some giants in the U.S. corporate world have not escaped the job market chill. For example, Amazon announced this fall plans to cut approximately 14,000 positions, aiming to advance business streamlining and AI transformation.
Goldman Sachs economists Manuel Abecasis and Pierfrancesco Mei said, "A continued increase in layoffs would be especially worrying because the hiring rate is currently low, and unemployed individuals are finding it much more difficult than usual to find jobs."
Layoff Signals Reach Ten-Year High
The state filings cited by Goldman Sachs — the Worker Adjustment and Retraining Notification (WARN) Act — require companies with over 100 employees to file notices in advance of implementing layoffs. They are important indicators for observing employer behavior and can be used to judge whether layoffs are imminent.
Besides the increase in WARN notices, Goldman Sachs also found that management at a growing number of publicly traded companies are openly discussing potential layoffs during recent earnings conference calls. Combined with Challenger's outplacement data, these signs strongly suggest that more companies are considering layoffs and efficiency improvements in the coming months.
However, Goldman Sachs noted that weekly initial jobless claims remain low, meaning government reports might not yet fully reflect the extent of the labor market deterioration. The latest non-farm payroll data for September released by the U.S. Bureau of Labor Statistics even exceeded economists' expectations. Goldman Sachs added that initial jobless claims data typically lags behind private layoff tracking indicators by about two months, which could mean that unemployment figures in federal data might rise as time progresses.
Despite growing external concerns about whether artificial intelligence (AI) is prompting corporate layoffs, Goldman Sachs stated that current evidence does not show AI is driving the latest round of layoffs on a large scale. The bank said, "While AI may be increasingly considered in workforce decisions, clear evidence directly linking AI to layoffs remains limited."
