US Job Cuts Hit Highest May Level Since 2020 as Long-Term Unemployment Nears 2 Million

Key Takeaways

• US job cuts rose to 97,006 in May, the highest May total since 2020
• Long-term unemployment climbed to 1.99 million, its highest level since December 2021
• US households now hold a record 48% of their financial assets in stocks, increasing exposure to potential economic weakness

The US labor market has spent much of the past year defying recession fears. But some of the latest data suggests the picture may be getting less straightforward. While the US economy continues to add jobs and stocks remain near record highs, more workers are finding themselves unemployed for longer periods. At the same time, US job cuts are accelerating. With all of this in the picture, numbers hint at a labor market that may be losing some momentum beneath the surface.

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Long-Term Unemployment Climbs to Highest Level Since 2021

The number of Americans classified as long-term unemployed rose to 1.99 million in May, according to data from the US Bureau of Labor Statistics. These are workers who have been out of a job for 27 weeks or longer. This figure increased by 155,000 from April and is up 524,000 compared with a year ago. Long-term unemployed workers now account for 27.5% of all unemployed Americans. This is the highest share since December 2021.

This matters because extended unemployment often signals a more difficult hiring environment. Even when overall job growth remains positive, longer job searches can indicate that opportunities are becoming more limited in certain sectors of the US labor market.

Separately, another research reported that employers announced 97,006 layoffs in May. This was up 16% from April and marked the highest May total since 2020.

The increase adds to evidence that some employers are becoming more cautious as economic uncertainty persists. While the US economy is far from recession territory, rising layoffs and growing long-term unemployment are drawing closer attention from economists looking for early signs of stress.

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Americans Are More Exposed to Stocks Than Ever Before

The employment data arrives at a time when household finances are increasingly tied to market performance. According to Federal Reserve flow-of-funds data, US households now hold roughly 48% of their financial assets in equities. This is a record high that exceeds levels reached during the Dot-Com era.

For investors, this means labor market weakness carries broader implications. A slowdown in hiring or consumer spending can ripple through corporate earnings, particularly when stock valuations remain elevated.

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