WASHINGTON — Retailers announced 92,989 job cuts in 2025, a 123% increase from 2024, according to Challenger, Gray & Christmas. The sharp rise highlights the cumulative pressures merchants faced last year, including tariff uncertainty, changing consumer spending habits, and consistently higher operating costs.
The weakness carried into the holiday season. Challenger reported last fall that retail holiday hiring in the last three months of 2025 was the weakest since 2009, indicating caution among employers during what is usually the industry’s busiest period.
Retail’s decline reflected broader labor market stress. Across all sectors, employers announced more than 1.21 million job cuts in 2025, the highest annual total since 2020 and a 58% increase from 2024, Challenger data shows.
Entering 2026, indicators suggest the labor market remains fragile. ADP reported that private employers added 41,000 jobs in December, a modest rebound from November’s 29,000-job decline but below economists’ expectations of 48,000. Job gains were concentrated in services, while goods-producing industries shed 3,000 positions, led by a 5,000-job drop in manufacturing.
Consumers are taking notice. Nearly 63% expect unemployment to keep rising in 2026, according to the University of Michigan.
The labor market—and consumers’ views of it—continues to have a significant impact on spending habits. That concern is already visible at the grocery store. Unless labor conditions improve significantly, that caution is expected to last across retail sectors.
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