Major US companies plan to cut 52,000 jobs, citing economic uncertainty and AI investments

[The Financial News]


Major corporations in the United States of America (US) are announcing large-scale layoffs.
They say they need to streamline their organizations because the economic outlook is uncertain and they must secure massive funds for investments in artificial intelligence (AI).

The Financial Times (FT) reported on the 30th, local time, that plans to cut more than 52,000 jobs were announced just this week alone.
US corporate giants including Amazon, logistics company UPS, chemical maker Dow, Nike, and home improvement retailer The Home Depot have all unveiled sweeping layoff plans.
UPS, often described as a bellwether for economic trends, said on the 27th that it would cut 30,000 jobs this year, citing a decline in parcel volumes from Amazon. The next day, Amazon announced it would eliminate 16,000 positions in a bid "to cut bureaucracy."
Dow and The Home Depot plan to let go of 4,500 and 800 employees respectively. Nike has also announced plans to cut 775 jobs.

David Mericle, chief economist at Goldman Sachs, said, "There is growing discussion among companies about layoffs," and added, "They appear eager to use AI more aggressively to reduce labor costs."
This marks a complete reversal from the trend that followed the pandemic.
After the outbreak of Coronavirus disease 2019 (COVID-19) in 2020, online shopping boomed and massive government stimulus drove a surge in sales, prompting companies to embark on large-scale hiring. The US labor market suffered from a severe labor shortage.
However, uncertainty stemming from AI and the erratic policies of the Donald Trump administration is now turning that trend around.
Facing growth concerns and the cost pressure of raising capital for AI investments, companies are cutting back on new hiring and even laying off existing staff.

Felix Aidala, an economist at the online job site Indeed, noted, "Announcements of layoffs at well-known companies are certainly drawing attention, but overall layoffs over the past year have not been abnormally high," and pointed out, "In particular, compared with the pre-pandemic period, there is nothing especially unusual." Aidala added, "One reason the signals around layoffs feel so mixed is that hiring has slowed dramatically compared with the past."
Jerome Powell, chair of the Federal Reserve System (Fed), also said on the 28th, after the first Federal Open Market Committee (FOMC) meeting of the year, that the labor market was stabilizing, citing the drop in the unemployment rate from 4.5% to 4.4%.
Even so, the momentum behind new hiring has weakened significantly.
In December last year, the US added only 50,000 new jobs. As hiring slowed, the median duration of unemployment reached 11.4 weeks last month, the longest since 2021.
Aidala explained that because the number of new jobs has fallen so sharply, workers are feeling the pain of layoffs more acutely and are far more fearful that they could be laid off.

dympna@fnnews.com Song Kyung-jae Reporter