Fed official warns of US recession risk after ‘eye popping’ lay-offs

A senior Federal Reserve official has warned of a possible US recession after “eye-popping” lay-offs from major companies amid a slump in consumer confidence.

Christopher Waller, a member of the Federal Reserve Board of Governors, said he would vote for an interest rate cut at the central bank’s next meeting in December because of clear signs that the US economy was “significantly slowing” compared to last year.

US job cuts so far in 2025 have surged by 65pc compared to last year, and October’s total was the highest for that month since 2003, according to a report by Challenger, Gray & Christmas, a company that helps laid off workers find jobs.

Businesses that confirmed major lay-offs at the end of October included Amazon, which is sacking 14,000 workers, Paramount, which cut 1,000 staff and the retailer Target, which slashed its headcount by 1,800.

“Such announcements are anecdotes and may not be fully reflected, at least in initial unemployment claims, but the numbers are eye popping,” Mr Waller said on Monday.

A major drop in US consumer confidence, which slumped to a near record low in November according to the University of Michigan, is also a warning sign of a possible recession, he added.

Mr Waller said: “Large and persistent drops in consumer sentiment have occurred heading into recessions in the United States.

“Personal consumption expenditures are about 70pc of GDP, so a slowdown in spending has dramatic implications for GDP growth.”

He added: “I’ve been hearing more and more, talking to a lot of people, particularly CEOs and companies, four to six weeks ago, we were still in this kind of no hire, no fire mode. [Now] they’re starting to talk about lay-offs.

“They’re starting to plan for them in the future… at some point this is going to start happening.”

Lower and middle income families in the US are struggling to cover payments on their mortgage and car loans, following long periods of price rises and amid high interest rates.

Signs of strain will become a “more acute” problem for the US economy if America’s jobs market weakens further, Mr Waller said.

The Fed has come under heavy fire from Donald Trump, the US president, this year for not cutting interest rates quickly enough.

The president has called Fed chairman Jerome Powell a “numbskull” and is trying to to sack Lisa Cook, another Fed Governor.

The Federal Open Markets Committee (FOMC), of which Mr Waller is a member, kept interest rates on hold because it was expecting Mr Trump’s sweeping trade tariffs to bring higher prices.