The layoff headlines have started again — and not just from struggling startups.
In the past week, Amazon, Cisco, Robinhood, Snap, and multiple regional banks announced new rounds of job cuts. On Friday, Challenger Gray & Christmas reported that U.S. layoff announcements are now up 15% year-over-year, reversing the cooling trend we saw over the summer.
And this time, the cuts aren’t coming from distressed companies. They’re coming from profitable firms preparing for 2025.
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This Week’s Briefing
The return of layoffs comes at an awkward moment for markets:
The unemployment rate recently ticked up to 4.2%, the highest level since late 2021.
Last week’s jobless claims unexpectedly rose — again.
Multiple companies in tech and finance cited the same reason for cuts: slower demand headed into Q1 2026.
CFOs surveyed by Deloitte on November 18 said their top fear is a “profit margin squeeze,” ahead of both inflation and geopolitics.
Even more concerning: the job cuts are happening despite rate cuts from the Federal Reserve earlier this fall. If monetary easing isn’t boosting hiring, it raises a difficult question about the strength of corporate revenue heading into next year.
The S&P 500 reacted with slight volatility Monday — but nothing close to what rising job losses typically bring. That disconnect matters.
Why It Matters
Layoffs aren’t just a labor story — they’re a forward indicator of earnings.
Companies cut staff when two things are true:
Costs are rising faster than revenue.
They don’t expect demand to rebound quickly.
And when layoffs accelerate, corporate profits usually follow — downward.
Market optimism has been running hot over expectations of continued Fed cuts, but softening labor data suggests those cuts may arrive in an economy losing momentum more quickly than the market is pricing in.
A few things investors should note:
Rising job cuts often precede earnings revisions by one to two quarters.
Profit margins have already been tightening, especially in consumer discretionary and software.
The market’s leadership is narrowing — a classic late-cycle behavior.
A weaker labor market can dampen consumer spending just as holiday sales forecasts are already coming in softer than expected.
The data isn’t recessionary. But it’s not stable either.
Takeaway
The return of layoffs isn’t a headline to scroll past — it’s an early signal of where corporate earnings may be headed in 2026.
If labor weakness continues into December, we could see analysts revise earnings expectations just as markets are pricing in a smooth, “soft landing.”
That scenario can shift quickly. And layoffs usually tell the story before the market does.
— Lauren Brown
Editor, American Ledger