Are DOGE layoffs set to resume?

Investing.com -- The Supreme Court has cleared the path for the Trump administration to proceed with large-scale federal workforce reductions, reviving a controversial effort that had been paused since May.

The ruling lifted a lower-court order that had temporarily blocked the administration’s Reduction in Force (RIF) plans, allowing agencies to move forward with layoffs even as legal challenges continue.

Although the decision is technically temporary, Wolfe Research analysts note that it sets a precedent that enables immediate action.

“In practice, this means layoffs can begin—and by the time judges fully deliberate on Trump’s plans, many months or even years from now, most affected workers will likely have already moved on,” said Stephanie Roth, Chief Economist at Wolfe Research.

Before being halted by the courts, the administration had reportedly aimed to cut up to 150,000 federal jobs. Wolfe Research has tracked about 112,000 layoff announcements so far, while also flagging that the actual number could be higher.

If a significant portion of those reductions go ahead within the next six months, the brokerage firm estimates a drag of about 25,000 jobs on employment growth, and a potential 9 basis point increase in the unemployment rate.

This comes on top of an ongoing federal hiring freeze, which has already curbed job additions by roughly 10,000 a month.

The initial wave of job cuts focused on recently hired federal employees still in their probationary periods. Those dismissals, which affected around 25,000 workers, were followed by internal preparations for broader and more permanent reductions.

The freeze on RIFs, imposed in early May due to constitutional and procedural concerns, has now been lifted, re-accelerating the process.

Roth also highlighted a separate employment headwind later this year. About 99,000 federal workers participating in a deferred resignation program will officially exit the payroll on September 30, which will impact the October jobs report.

However, she stressed that these departures do not represent new economic developments and should be viewed in context.

While the cumulative effect of these measures is adding to a softening labor market, Roth says this is “likely isn’t a game changer for the Fed—at least not ahead of the next live meeting in September.”

Since Trump took office, federal employment has fallen by an average of 14,000 jobs per month, totaling a decline of 69,000. The drop has largely been attributed to attrition stemming from the hiring freeze introduced on his first day.

But with mass layoff plans now expected to resume, further weakening in federal employment appears likely in the months ahead.