The U.S. economy is showing signs of stability, but a wave of layoffs is sweeping through major companies, including Procter & Gamble, Microsoft, Citigroup, Walmart, Klarna, Disney, Paramount and Warner Bros. Discovery. Despite a steady labor market, these companies are under pressure to reduce costs because of global uncertainty linked to tariffs imposed by President Donald Trump.
Experts indicate that while government job cuts are decreasing, companies are still feeling the financial strain. Many have resorted to raising prices, but layoffs remain a significant cost-cutting measure. Concerns persist about how tariffs and trade tensions might slow the economy overall.
Artificial intelligence is also playing a growing role in these layoffs. Klarna CEO Sebastian Siemiatkowski revealed that the company has cut 40% of jobs partly because of AI investments. Just this past week, the AI-powered payments and commerce network launched a CEO hotline where it consumers can provide direct product feedback in a one-to-one conversation with an interactive AI avatar trained on Siemiatkowski’s real voice, insights and experiences, according to a company news release.
Shopify CEO Tobias Lütke told employees in April they must justify why tasks cannot be performed by AI before requesting additional workers and resources. In addition, using AI effectively is now a fundamental expectation of everyone at Shopify, they are encouraged to keep learning and experimenting with AI and to use it from the start of product developement, according to an internal memo he posted to X because “it was in the process of being leaked and (presumably) shown in bad faith.”
Google is also making moves to free up cash for AI investments. The company is offering voluntary buyouts to U.S. employees across multiple teams, including search, ads, engineering and research, as it plans to spend about $75 billion this year on capital expenses. This is part of Google’s strategy to expand AI features like its new “AI Mode” search tool while maintaining cost efficiency, according to The Wall Street Journal.
Industry leaders warn that AI could trigger a “white-collar job apocalypse.” The Anthropic CEO Dario Amodei told Axios that AI could eliminate half of all entry-level white-collar jobs within one to five years, potentially causing unemployment rates to spike to 10% or even 20%. He is advocating for more transparency from AI companies and urging the government to prepare for the potential impact, suggesting a “token tax” on AI models to help redistribute wealth if job losses become severe.
The latest job report also highlights a challenging landscape for new graduates, with March and April job gains revised down by a combined 95,000 jobs. As companies slow hiring, current workers are opting to stay in their positions.
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