US employers announced over 108,000 layoffs across January, in the highest to start the year since the depths of the Great Recession in 2009. Many executives were quick to blame AI for the layoffs, though the real reason might be simpler: companies just aren’t optimistic about the direction the economy is heading.
According to new reporting by CNBC, layoffs are up 118 percent from January, 2025, and a whopping 205 percent compared to December 2025. Throughout the month, US corporations tracked by analyst firm Challenger, Gray and Christmas only reported 5,306 new hires — another low which hadn’t been seen since January of 2009.
“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January,” Andy Challenger, chief revenue officer at the analytics firm, told CNBC. “It means most of these plans were set at the end of 2025, signaling employers are less-than-optimistic about the outlook for 2026.”
The horrid numbers come as tech companies announce plans to dump more money into AI than ever before. Earlier this week, Google’s parent company Alphabet announced it would double its AI capital expenditures from the $90 billion it spent in 2025 to as much as $185 billion, per the New York Times.
With so much hope for AI’s future, it’s no wonder many commentators and businesses titans have blamed the tech for the bone-dry job market. Yet as the market research firm Forrester explained in its January labor report, the “job apocalypse” is way overblown.
“Many companies announcing AI-related layoffs do not have mature, vetted AI applications ready to fill those roles, highlighting a trend of ‘AI washing’ — attributing financially motivated cuts to future AI implementation,” the report read.
In fact, some companies’ financial woes might actually be the result of AI-washing in previous years. As Forrester puts it, “over-automating roles due to the hype surrounding AI can lead to costly pullbacks, damaged reputations, and weakened employee experiences.”
So while the job market might be struggling, resist the knee-jerk temptation to blame AI. We’re not living in the cyberpunk dystopia yet — just the age-old grind of an all-too-familiar capitalist economy.
More on jobs: AI Agents Are Mathematically Incapable of Doing Functional Work, Paper Finds
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