What the recent slew of layoff announcements means for HR

This year will be remembered for many things…and layoffs will, unfortunately, likely be one of them.

UPS is cutting 48,000 workers. Amazon is laying off 30,000. Paramount and Target are each eliminating 1,000. US companies conducted 13.8 million layoffs and discharges in 2025 as of August, up from 3.5 million in May, and a 4.6% jump from August 2024.

Some of these companies are replacing workers with AI, while others are responding to the economic volatility caused by the government shutdown, interest rates, and tariffs. Economists shared with HR Brew what recent layoffs might signal about the state of the labor market and economy.

What is going on? These RIFs may not be a sign that a recession is around the corner, but rather a “weird mishmash of factors,” said Elizabeth Renter, senior economist at NerdWallet.

“When layoffs signal an economic downturn…they’re broad based and they’re across industries, and according to the data that we have—which is lacking, admittedly—there wasn’t red flags that they were heading northward and broad based across industries,” Renter said.

When growth didn’t lead to substantial profit gains after the pandemic-era hiring sprees of 2022, companies had to course correct with layoffs, said Daniel Zhao, chief economist at Glassdoor. Nowadays, trends like job hugging and the Big Stay have resulted in a “low hire, low fire job market,” Zhao added. Despite the recent layoffs, he said the US labor market remains fairly healthy.

“Employers are in a holding pattern because of the uncertainty, like we’re going to see how tariffs play out. We’re going to see how immigration impacts play out, and we’re just going to wait and see,” Renter said. “They’re saying, ‘Okay, well now, in the interest of what I don’t know about the future, I’m going to be conservative, and I’m going to cut some headcount.’”

Is AI a red herring? When companies cite AI as a reason behind layoffs, it doesn’t necessarily mean the tech is currently changing the way they conduct business, according to Zhao.

“For one thing, that’s a pretty vague statement. Like, are companies using AI as a reason for layoffs because those jobs are being replaced by AI?” he said. “Is it because they need that money to redeploy, to hire other people, to implement AI? Is it because AI is fundamentally altering their business model and making it so that their traditional strategies are no longer profitable?”

Companies may be anticipating how AI will impact their workforces, Renter said. And some, Zhao added, may also be reacting to investor demands and competitor pressures.

“They might be incentivized right now to say that [layoffs are] because of AI, because they know that other companies are signaling this, and they know that investors are wondering whether they’re implementing AI at a time when all their competitors are,” Zhao said.

In short, the recent layoffs may just be a sign of a normal business cycle, Zhao added. AI could very well be a red herring in the labor market. Only time will tell.