Planned layoffs surged to the highest monthly total since mid-2020 last month, with the Department of Government Efficiency and Elon Musk's fingerprints all over the data, according to the Challenger, Gray & Christmas outplacement firm. After bouncing on Wednesday, both the S&P 500 and Tesla (TSLA) are pointing lower early Thursday.
A separate Labor Department report showed initial claims for jobless benefits undercut estimates for the week of March 1, making it unclear whether the labor market has already turned soft under the double-whammy of Trump tariffs and DOGE, run by Tesla CEO Musk. However, the latest data could be an undercount, since reporting of most new jobless claims by federal workers is delayed by a week.
↑ X NOW PLAYING Stocks Jump On More Tariff Talk: Cloudflare, Aon, Doximity In FocusNew claims for jobless benefits fell to 221,000 from an unrevised 242,000 in the week through March 1. Meanwhile, the ranks of people continuing to claim jobless benefits rose 42,000 to 1.897 million in the week through Feb. 22.
Because of the one-week delay in counting claims for federal civilian workers, "layoffs are running at a higher rate than the advance initial jobless claims number for the week ending March 1 suggests," wrote Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics."
The initial claims data shows 1,634 federal civilian workers filed for jobless benefits in the week through Feb. 22, up 1,020 from the prior week.
Still, the data suggest that the jump in claims in the Feb. 22 week had more to do with the weather than DOGE.
Yet the Challenger data make clear that the DOGE effect will eventually hit, and reports of more federal job cuts have continued into March.
Challenger said that U.S. employers announced 172,017 planned layoffs, a bit more than double the January total and the highest since July 2020.
The monthly layoff tracker credited 62,242 cuts to the DOGE effect, with cuts announced across 17 federal agencies. The retail sector's 38,956 announced layoffs were the second biggest contributor.
The small number of federal employee claims through Feb. 15 suggests a very limited DOGE effect through mid-February. Since the monthly jobs report is based on a mid-month survey, it won't show much impact from DOGE.
Wall Street expects Friday's jobs report to show that employers added 160,000 payroll jobs, including 143,000 in the private sector. The unemployment rate is expected to hold at 4%.
On Wednesday, the ADP Employment Report said private employers boosted payrolls by just 77,000, far below views. But ADP has a mixed record at best in predicting official jobs data.
The S&P 500 fell 1.3% in early Thursday stock market action, reversing Wednesday's 1.1% rebound. Through Wednesday, the S&P 500 was 1% above its Election Day close.
Tesla is 4% lower on Thursday morning. That followed a 2.6% bounce on Wednesday that left TSLA stock just below its 200-day line. Shares nearly doubled in the six weeks after the election, but have since given back most of that gain as Musk's high profile causes a backlash for Tesla, especially in Europe.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
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