Is it AI or Trump's policies? US sees brutal 140% layoff spike in July, worst surge since early COVID chaos
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The United States is facing its steepest wave of layoffs since the early chaos of the COVID-19 pandemic, with job cuts in July surging 140% compared to a year ago, as per a report. As thousands lose their jobs across industries, two culprits stand out: the rise of artificial intelligence and the federal government's aggressive downsizing under US president Donald Trump, as per a Newsweek report.
July Layoffs in US Spike 140%: What's Driving the Surge?
Employers revealed that there were 62,075 layoffs last month, reported Newsweek, citing the latest report from outplacement firm Challenger, Gray & Christmas. That's a 29% increase from June, well above the post-pandemic average for July (23,584 between 2021 and 2024), and even higher than the monthly average of 60,398 over the past decade, according to the report.
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The year-to-date total for 2025 has now reached 806,383 cuts, which is a 75% increase over the same period in 2024 and already 6% higher than all layoffs recorded last year, as reported by Newsweek. It's the highest total for January through July since 2020, when shutdowns pushed job losses past 1.8 million, according to the report.
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AI Takes Center Stage in Layoff Trends
One major force behind the layoffs is AI. Automation and artificial intelligence have already been linked to more than 20,000 job cuts this year, including over 10,000 just in July, as per the Newsweek report.
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Andrew Challenger, a senior vice president and labor expert at Challenger, Gray & Christmas, said that, "We are seeing the federal budget cuts implemented by DOGE impact nonprofits and health care in addition to the government," adding, "AI was cited for over 10,000 cuts last month, and tariff concerns have impacted nearly 6,000 jobs this year," as quoted in the report.
Fabian Stephany, an assistant professor for AI and work at the University of Oxford, explained that the latest round od layoffs might be due to a combination of "late-cycle cost discipline and post-pandemic normalization," rather than a sign of a full-scale employment downturn, as reported by Newsweek.
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He said that, "Many firms are correcting for the overhiring of 2021 to 2022 while protecting margins through productivity gains, some of which are enabled by automation," as quoted in the report.
Stephany pointed out that AI's immediate impact is on "transactional, routine, and standardized work—particularly in junior roles," as quoted by Newsweek.
Jason Leverant, the COO and president of AtWork Group, said that automation impacat jobs that fell into what he described as the "Three D's": dull, dirty or dangerous, and many white-collar positions in the "dull" category are already being replaced by AI tools, as reported by Newsweek.
Leverant and Stephany have highlighted that AI would keep reshaping the labor market this year, with Stephany saying, "The likely path is steady, incremental reshaping of roles through attrition and slower hiring, rather than sharp spikes in AI-related layoffs," as quoted in the report.
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However, the rise in layoffs this year is not only because of AI but also because of many other factors like government downsizing and corporate restructuring, with public agencies, tech firms and retailers leading the cuts, according to the Newsweek report.
DOGE Downsizes Government Workforce Dramatically
A massive number of layoffs in 2025 have been from the federal government, with a total of 292,294 since the year started and after Trump's Department of Government Efficiency (DOGE) continued its mission to reduce the size of numerous agencies, as per the report. Even contractors and organizations dependent on public funding have been affected due to the "DOGE Downstream Impact", reported Newsweek.
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Private Sector Hit by Restructuring, Store Closures, and AI Shifts
While the private sector layoffs have been concentrated in industries under structural pressure, technology and telecom companies are reducing workers as they shift investment toward AI and cloud infrastructure, and retailers have been hit by softer discretionary spending, higher costs and changing consumer habits, prompting store closures, as reported by Newsweek. The other sectors with record-high job cuts include finance, business services and transportation, where companies are scaling back capacity after pandemic-era expansions, as reported by Newsweek.
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Economic Uncertainty, Inflation, and Tariffs Add to Layoff Pressures
The reason given for about 170,000 job cuts so far this year was economic conditions like inflation, shifting demand and global uncertainty, according to the report. Even business restructuring, store or plant closures, and bankruptcies have driven many layoffs, as per the Newsweek report.
FAQs
Why are so many people getting laid off in the US this year?
Job cuts are being driven by a mix of AI adoption, government downsizing, economic uncertainty, and corporate restructuring, as per the Newsweek report.
Is AI really taking over jobs?
Yes, over 20,000 layoffs this year have been linked to automation and AI, particularly in routine, junior-level roles and administrative tasks, as per the Newsweek report.
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