Annika Swenson, a senior at the University of Iowa, said layoffs at companies like Amazon have made her more anxious. The sheer number of applicants to positions and the fast-moving pace of AI have also increased her stress level. In a year, it is possible “there just wouldn’t be a person needed to do that job anymore,” – she said of some entry-level positions.
Companies in hot sectors like tech and AI (artificial intelligence) had been “locking” tech talents during the Covid-19 pandemic to prevent competitors from snapping them up. But this safety net appears to be crumbling. With firms now shifting their focus to efficiency and enhanced productivity, they are preparing to cut jobs, even in AI, resulting in a higher unemployment rate.
Fears that the U.S. economy is slowing, with companies trimming jobs and imposing hiring freezes, have already sent Wall Street into negative territory. A report showed that last month was the worst for U.S. layoffs since 2003. U.S. markets have also been rattled by a review of Donald Trump’s tariffs by the supreme court, which could result in the U.S. president being forced to abandon his flagship policy.
Thanks to Trump’s sweeping tariffs, high-income consumers are trading down, Gen Z is spending less, and low-income shoppers are still struggling. As sales slowed at Walmart, Home Depot and Lowe’s, analysts expect a weaker holiday spending. The best part is even the fast-food industry saw traffic from high-income diners climb by nearly double digits in the third quarter this year – according to McDonald’s.
Now, employers have a warning for the Class of 2026 – next year’s graduate-hiring market is likely to be even worse than this year’s. 2026 is likely to be a year of “low hiring, high firing.” Goldman Sachs’s layoff tracker – indicator based on layoffs, labour slack, and job growth – is currently at levels higher than those seen at the start of the pandemic in 2019.
Six months out from graduation season, more than half of 183 employers surveyed by the National Association of Colleges and Employers rate the job market for the Class of 2026 as poor or fair. That is the most pessimistic outlook since the first year of the pandemic, according to the survey, which is widely seen as an early signal of graduate hiring each year.
In another indicator, a survey by Challenger, Gray & Christmas found that employers announced 153,074 job cuts last month, compared with 55,597 in October 2024. It said U.S. firms announced the termination of 1.09 million jobs during the first 10 months of this year, up 44% from the 761,358 cuts in 2024. Crucially, technology businesses led to private-sector layoffs.
A cooling job market is definitely darkening that outlook. In recent months, private employers from Amazon.com to United Parcel Service have publicly revealed plans to cut thousands of jobs. The latest big boy joining the bandwagon is Verizon Communications – the largest U.S. telecommunications provider – which plans to cut 15,000 jobs in its largest reduction ever.
So far in 2025, there have been at least 632 layoffs at “tech companies” with 200,043 people impacted (629 people per day). Amazon, the nation’s second-largest private employer, with more than 1.54 million staffers globally, already announced that it will lay off about 14,000 employees, marking the latest cuts in the company’s multiyear effort to rein in costs.
While Amazon’s jobs cut affecting employees in cloud, grocery, video games, human resources, sustainability and communications, ads and devices units, Meta laid off about 600 in its AI division. Microsoft has cut more than 15,000 staff this year, while Google decided to reduce bureaucracy by eliminating 35% of managers. Still,the biggest victim is the freshmen.
Companies say the uncertain economic outlook has pushed them to hire more conservatively, prioritizing recruits with some experience as opposed to fresh-from-college graduates. More executives are also speaking openly about the potential of artificial intelligence to bring deep job cuts and take over more tasks that new graduates are traditionally tapped to do.
For college seniors, that means they are also competing against junior workers who have been recently laid off. The unemployment rate for recent college graduates was 4.8% in June, greater than overall unemployment that month and the highest June level for recent graduates in four years, according to a Federal Reserve Bank of New York analysis.
Overall, employers say they expect a 1.6% increase in hiring for the Class of 2026, down considerably from their plans for the Class of 2025 last fall, according to the semiannual survey. College recruiting for full-time jobs typically kicks off in the fall or earlier, and by the spring, employers have a clearer sense of where hiring will land. In recent years, employers have revised their spring plans downward from the fall survey.
Swenson, 22, is studying marketing and this week alone has applied for about five to 10 jobs. She kicked off her search over the summer. “I just need to get one,” – she said. The early-career job-search platform Handshake found that in August, full-time job postings had declined more than 16% year-over-year, and there are an average of 26% more applications per job. More than 60% of 2026 graduates said they were pessimistic about their careers.
Christine Cruzvergara, Handshake’s chief education strategy officer, said employers are falling into three buckets. Some have paused hiring amid economic uncertainty, some have laid off staff in the name of efficiency and some are growing modestly. Almost everyone appears to be affected – even job hunters were losing jobs, either could not find one or were retrenched.
Giavanna Vega, a former entry-level recruiter and internship program director at Automation Anywhere, which streamlines business processes, described the hiring environment as at a standstill. Vega was herself laid off from her recruiting role in 2023. After a contract role in tech that ended a year ago, she has worked as an esthetician as she applied for corporate jobs.
“Because we’re in a state of uncertainty, they don’t know where to invest,” – she said of companies’ recruiting strategies amid tariffs and AI developments. That is coming down harder on new graduates – “they don’t have the training.” The competition in the job market has been so fierce that people who have more experience are willing to take entry-level positions because they can’t find anything.
Meanwhile, students are applying “to hundreds and hundreds of jobs”. They just shoot off applications after applications, a desperate strategy that could backfire because many employers are turned off by generic applications. However, some sectors are spared – fields seeing job growth include healthcare, education and manufacturing.
To make matters worse, the Federal Reserve doesn’t have the capacity to stem the labour market slowdown by cutting interest rates. Goldman Sachs said the Fed doesn’t have the tools to balance issues like AI applications or immigration policies, as these factors create structural, not cyclical, unemployment. That has attracted the attention of President Trump, who has been fighting for a lower interest rate.
Fearing the worst, panicked Trump signed an executive order exempting a range of food imports – including coffee, beef, oranges, tomatoes and bananas – from his reciprocal tariff policies. The spectacular U-turn comes amid nationwide complaints of high grocery prices. The president finally admits what we have all known from the beginning – Trump’s Trade War is hiking costs on people.
Here’s the key trends likely to shape 2026 and beyond – from a stubborn employee engagement slump to frugal consumers and fluid brand loyalties. After two years of red-hot hiring and musical chairs in the job market, employment is cooling and the chicken has come home to roost. Managers are having to fight for headcount as the C-suite looks for ways to drive productivity via AI.
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November 15th, 2025 by financetwitter
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