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By Hugh Cameron
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Labor market experts believe a recent decline in layoff announcements may give way to tougher hiring and firing conditions in the U.S. following the outbreak of military action in the Middle East.
On Thursday, the outplacement firm Challenger, Gray & Christmas released its latest monthly layoff report, revealing that job cut announcements plummeted 55 percent between January and February to 48,307.
Workplace expert Andy Challenger called the figures "a nice reprieve" following the previous month's elevated reading, but said the unfolding conflict in Iran "may bring more layoff plans as companies tighten belts amid uncertainty and higher costs."
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Why It Matters
The outbreak of fresh conflict in the Middle East has already unsettled global markets and threatened to push up energy prices to levels not seen in years.
It comes as American consumers were already grappling with affordability pressures, and the latest predictions from the labor market indicate that the conflict could evolve into a broader threat to the U.S. economy depending on its duration.
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What To Know
According to Challenger, Gray & Christmas, the 48,307 job cuts announced by U.S.-based employers in February marked a 72-percent decrease from the 172,017 announced a year prior.
Despite January's high reading of 108,435 layoffs, this year's current total of 156,742 marks the lowest opening two months since 2022.
Hiring plans also increased last month, more than doubling to 12,755 from 5,306 in January. However, this represents a decline of 63 percent from last February, with the two-month total down 56 percent year-over-year.
Closures of stores, units or departments drove the most layoffs in February, totaling 10,736. Other reasons cited in the announcements included market and economic conditions (10,114), restructuring (9,146) and cost-cutting (5,636) and artificial intelligence (4,608).
Technology firms led the way with 11,039 layoff announcements in February, with education and industrial manufacturing also logging significant year-over-year gains.
The report also said that transportation—whose layoff total for January and February was up 872 percent compared to the same period in 2025—is a sector that could be vulnerable to the latest geopolitical developments.
"The growing conflict in Iran will likely further impact transportation companies as oil costs rise and supply chains are disrupted," it said.
Brent crude prices—the international benchmark—have spiked since the U.S. and Israel began a series of targeted strikes on Iran on Saturday.
Experts have said that Iran's response of closing the Strait of Hormuz—through which around a fifth of the world's oil passes every day—along with launching drone attacks across the Gulf, could push prices above the $100 level not seen since 2022.
The economic consequences of this are already beginning to be felt in the U.S. Gas prices are once again shooting up, and the resulting impact on inflation forecasts has now trimmed hopes that the Federal Reserve will cut rates at its upcoming meetings as it tries to balance the new pressures.
What People Are Saying
Economist Paul Krugman wrote in a recent Substack post: "One shouldn't exaggerate the economic fallout from this war. But it isn't occurring in isolation: There are many stresses on our economy, and this could be the straw that breaks the camel's back—a straw that becomes heavier the longer the war goes on."
Minneapolis Fed President Neel Kashkari said at the Bloomberg Invest conference in New York on Tuesday: "I think right now it's just too soon to know what imprint this has on inflation and for how long."
He added that policymakers would need "a lot more data" before adjusting their monetary policy calculus.
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