On Thursday morning, consulting firm Challenger, Gray & Christmas issued an alarming report: U.S. employers announced 108,435 job cuts in January, the highest total for the month since 2009, when the economy was in the final months of the Great Recession.
The announcement set off a wave of panic-inducing headlines comparing today’s labor market to the depths of the financial crisis.
But a closer look at official government data—and the recent trajectory of Challenger’s own reports—suggests the picture is far less dire than the headlines suggest.
While Challenger tracked surging layoff announcements, actual unemployment claims told a markedly different story throughout January.
Initial jobless claims—the number of Americans filing for unemployment benefits for the first time—averaged 211,200, the lowest since May of 2024 and below the long-term average for a growing economy. Continuing claims—representing workers already receiving unemployment benefits—fell to 1.827 million in mid-January, the lowest level since September 2024.
Federal Reserve Chair Jerome Powell, speaking after the Fed’s January policy meeting, characterized the labor market as having “stabilized” following the softening seen in the fourth quarter of 2025. While acknowledging slower hiring, Powell’s assessment suggested a labor market finding its footing rather than one in freefall.
The most recent JOLTS (Job Openings and Labor Turnover Survey) report, released Thursday for December data, showed the layoff rate holding steady at historically low levels, unchanged from November.
What Challenger Gray Measures
Just four weeks ago, the firm reported that December saw the lowest number of announced job cuts in 17 months—just 35,553 cuts. Andy Challenger, the firm’s chief revenue officer, called it “a positive sign after a year of high job cutting plans.”
The January figure represents a 205 percent increase from that December low—a month-to-month swing that highlights the extreme volatility in announcement data rather than any fundamental shift in labor market conditions.
Moreover, two companies—UPS and Amazon—accounted for over 42 percent of January’s announcements. UPS announced 30,000 cuts tied to ending its delivery arrangement with Amazon, a corporate strategy shift rather than a response to economic conditions. Amazon announced 16,000 cuts as part of a management restructuring aimed at reducing management layers. So the “worst January since 2009” is largely about two companies reducing headcounts.
Challenger produces its estimates by tracking planned job cuts through news reports, company filings, and state-by-state closure notices. But these announcements often don’t translate directly to unemployment.
Layoffs announced in a given month might not lead to people leaving jobs right away, making it unclear whether official labor data will show similar trends. Some announced layoffs never materialize. Others happen months or even years after the announcement. Many represent restructuring where workers find positions elsewhere in the company.
The Challenger data “can be volatile and not correlated to official statistics,” as CNBC noted in its coverage, though this caveat appeared at the very bottom of the article, long after the crisis-invoking headline.
Many economists prefer to look at the three-month moving average of Challenger job cuts, which smooths out the month-to-month volatility. In the November through January period, this was 71,770. That’s elevated compared with the period in recent years, but just 47 percent higher than the prior year and 32 percent higher than the year before that.
The weight of evidence suggests the U.S. labor market remains in what economists call a “low-hire, low-fire” equilibrium. Companies are cautious about adding workers but equally reluctant to let them go. A big driver appears to be the Trump administration’s crackdown on illegal immigration, which has slowed the growth of the workforce. As a result, companies are seeking to do more with the employees they have rather than add to headcount, resulting in a surge in productivity and capital investment.
Job openings have declined from their 2022 peaks but remain at levels that would have been considered healthy in any pre-pandemic year. The layoff rate in the December JOLTS report was unchanged from November and remains historically low. Actual jobless claims—the measure of workers filing for unemployment benefits—reached their lowest levels in a year during January.
The labor market has certainly changed from the red-hot hiring environment of 2021-2022, when many businesses were struggling to bring back workers fired during government-mandated shutdowns. Finding a new job takes longer. Switching jobs for higher pay is harder. But the data showing mass unemployment simply isn’t there.
One data point does not make a trend. And announcements are not the same as layoffs. The labor market remains far more stable than Thursday’s headlines suggested.