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. However, President Trump said on Thursday afternoon that going forward, DOGE will be limited to an advisory role, making suggestions to Cabinet officers. After bouncing on Wednesday, both the S&P 500 and Tesla slid even further on 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.
Trump Publicly Reins In Musk, DOGE
Trump told reporters after a Cabinet meeting that he instructed department heads to "go first, keep all the people you want, everybody that you need," The Wall Street Journal reported. Only then will Musk and DOGE step in, if cuts aren't deemed sufficient.
In a social media post, Trump said Cabinet secretaries will be able to use a "scalpel," not a "hatchet." Trump also announced meetings with DOGE every two weeks until the job of cutting government is done.
The pace of government layoffs will likely slow. It's not clear if Cabinet officials will seek to undo some of DOGE's decisions.
Trump also has acted to limit the damage from 25% tariffs imposed this week on imports from Mexico and most from Canada. Autos and other goods that comply with rules of the U.S.-Mexico-Canada Agreement that Trump signed in his first term won't face tariffs for at least 30 days.
Initial Claims Data
New 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 Layoffs
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.
February Jobs Report
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.
S&P 500, Tesla
The S&P 500 fell 1.8% in Thursday stock market action, more than reversing Wednesday's 1.1% rebound. Through Thursday, the S&P 500 is 0.8% below its Election Day close.
Tesla slid 5.6%, following Wednesday's 2.6% bounce. 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.
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