Job Cuts Drop to a 2-Year Low Despite AI Fears and Economic Worries

Fewer Americans lost their jobs in July than at any point in the past two years, according to new data released this week. Employers announced about 33,400 job cuts last month — down 46% from the same time last year. That's a big drop, and it shows that the U.S. job market is staying strong even while tariffs, inflation, and artificial intelligence are creating uncertainty. The numbers come from Challenger, Gray & Christmas, a company that tracks layoffs across the country.

Workplace expert Andy Challenger called the decline a major shift. "The pace of layoffs fell dramatically this summer," he said in a statement. He also noted that most layoffs being announced right now are happening in the tech industry, where companies are investing heavily in artificial intelligence. AI has been the top reason for job cuts for five months in a row, making up about 33% of all layoffs in July.

Even so, economists say the overall job market is staying balanced. Carl Weinberg, a chief economist at High Frequency Economics, explained that workers who lose their jobs are finding new ones quickly. "Recently laid-off workers are finding jobs as fast as the economy is creating new ones," he said. "That suggests the labor market is still balanced." That's a good sign for the health of the economy overall.

Another positive sign is the drop in weekly unemployment claims. The four-week average of people filing for unemployment benefits fell below 200,000 for the first time since October 2022. When fewer people file for unemployment, it usually means fewer workers are being let go. Economists at PNC Research highlighted this trend as further proof that layoffs are slowing down.

However, not everything is rosy. While companies are not firing many workers, they are also not doing a lot of hiring. The number of job openings around the country has stayed flat and is still below where it was before the COVID-19 pandemic. The government was scheduled to release new hiring data for July on Friday, and economists expected the report to show only about 97,500 new jobs added — a modest number. In June, employers added just 57,000 jobs, which was lower than most forecasters had predicted.

The national unemployment rate is currently 4.2%, which is low by historical standards. But some people are having a harder time than others. Recent college graduates, for example, are facing a tougher job market. Entry-level corporate jobs — the kind often filled by new graduates — have dropped by 15%, according to career platform Handshake. At the same time, the number of people applying for each open job has jumped by 30%, making competition much fiercer.