U.S. Federal Government Layoffs Reach 10-Year Low: In-Depth Analysis of Investment Impacts

Based on the latest collected data and market information, I will provide you with a

analyzing the impact of U.S. federal government layoffs on various investment targets.

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According to the latest data from the U.S. Bureau of Labor Statistics (BLS), the federal government experienced a significant wave of layoffs in 2025[1]:

Time Period	Number of Federal Employees (Excluding Active Military)	Change from Peak
January 2025	3.015 million	Peak
November 2025	2.744 million	-271,000 (-9%)
November 2025 (Excluding Postal Service)	2.51 million	-168,000

According to estimates from the Federal Reserve Bank of Atlanta, if indirectly employed personnel through contracts and grants are included, federal government-related jobs could decrease by as many as

[2].

U.S. unemployment rate shows an upward trend:

• January 2025: 4.0%
• September 2025: 4.4%
• November 2025:
  4.6%
  [3]

Nonfarm payrolls increased by only 64,000 in November 2025, and October saw a net decrease of 105,000, driven primarily by federal layoffs[3].

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Ticker Symbol	Company Name	Latest Stock Price	Period Price Change	Daily Volatility	Sector Classification
RTX	RTX (Raytheon)	$187.17	+57.70%	1.59%	Defense
LHX	L3Harris Technologies	$325.74	+40.85%	1.42%	Defense
HII	Huntington Ingalls	$378.47	+37.22%	2.61%	Defense
GD	General Dynamics	$351.44	+20.17%	1.36%	Defense
LDOS	Leidos	$195.22	+25.95%	1.84%	Government Services
NOC	Northrop Grumman	$590.79	+15.76%	1.62%	Defense
LMT	Lockheed Martin	$518.44	-6.77%	1.62%	Defense
SAIC	SAIC	$111.98	-13.84%	2.28%	Government Services
BAH	Booz Allen Hamilton	$94.22	-39.46%	2.33%	Government Services

• RTX (Raytheon)
  : Stock price rose 57.70%, the strongest performer. As a major manufacturer of F-35 fighter jets and advanced missiles, the company benefited from expectations of increased defense budgets[4].
• L3Harris Technologies
  : Rose 40.85%, driven by steady demand for communication and electronic systems.
• Huntington Ingalls
  : Rose 37.22%, benefiting from the U.S. Navy expansion program as the largest U.S. shipbuilder.

• Lockheed Martin
  : Fell 6.77%. Despite being the largest defense contractor, the stock continues to be plagued by F-35 project delays and cost overruns[5].

• Booz Allen Hamilton
  : Fell 39.46%, directly impacted by government cuts to consulting contracts[6]
• SAIC
  : Fell 13.84%
• Leidos
  : Bucked the trend with a 25.95% rise due to business diversification and winning some defense contracts

• DOGE canceled several large government IT contracts, which affected Leidos[7]
• Delays in government funding have led companies to cut employment outlooks

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The Trump administration proposed a record

fiscal 2027 defense budget, a 50% increase from the previously planned $1 trillion[8]:

“After long and difficult negotiations… our Military Budget for the year 2027 should not be $1 Trillion Dollars, but rather $1.5 Trillion Dollars.”
— President Donald Trump, Truth Social[8]

Metric	Change	Investment Implication
Defense Budget	+50% ($500B/year)	Long-term positive for defense contractors
Debt Impact	$5.8 trillion increase over 10 years	Fiscal sustainability in question
Funding Source	Tariff revenue	Policy uncertainty

Following the news release, defense stocks rose, with Lockheed Martin seeing a 7% after-hours gain[4].

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According to analysis from the Center for American Progress (CAP), the labor market exhibits the following characteristics[3]:

1. Federal employment continues to decline
   : 162,000 jobs lost in October, 6,000 lost in November
2. Overall employment growth stagnant
   : Minimal net change since April 2025
3. Unemployment rate rising
   : Increased from 4.1% in June to 4.6% in November

Industry	Employment Change	Reason
Healthcare	+46,000 per month	Demand from aging population
Construction	+28,000 per month	Stimulated by falling interest rates
Federal Government	-271,000 per year	Policy reforms
Postal Service	Relatively stable	Business characteristics

• Long-term unemployment (average unemployment duration for workers over 65 exceeds 30 weeks)[3]
• Employment-Population Ratio (EPOP) stagnated in 2025
• Unemployment rates for marginalized groups (young people, people of color) are rising faster

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Sector	Rating	Core Logic
Prime Defense Contractors	Overweight	High certainty of 50% budget increase, clear order growth
Government Service Contractors	Underweight	Lingering impact of DOGE contract cuts, high revenue uncertainty
Defense Subsystem Suppliers	Overweight	Diversified customers reduce single-source dependency risk

1. RTX (Raytheon)
   — Strong missile business, record backlog of $221 billion[9]
2. General Dynamics
   — Robust ground systems, shipbuilding business benefits from Navy expansion
3. L3Harris
   — Leader in communications electronics, high technical barriers

1. Booz Allen Hamilton
   — Overly reliant on government consulting services (>90% of revenue)
2. Lockheed Martin
   — Persistent project delay issues

• 2027 defense budget is successfully passed by Congress
• Escalating geopolitical tensions
• Actual layoff scale is lower than expected

• Defense budget cuts (subject to congressional approval)
• Changes in tariff policy impact funding sources
• Risk of government shutdown (a 43-day shutdown occurred in 2025)

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1. Significant divergence between defense and traditional government service contractors
   : Prime defense contractors benefit from budget increase expectations, while firms focused on government consulting face structural pressure.

2. Federal layoffs total approximately 270,000 jobs
   , with far-reaching impacts but not yet causing an overall labor market collapse.

3. If the

   $1.5 trillion 2027 defense budget proposal
   is passed, it will provide strong support for the defense sector.

4. In terms of investment strategy
   , it is recommended to overweight prime defense contractors, avoid pure government service contractors, and focus on companies with diversified businesses.

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[1] BLS - The Employment Situation November 2025 (https://www.bls.gov/news.release/empsit.nr0.htm)

[2] Staffing Industry Analysts - Federal job losses may top 1.2 million under Trump’s staffing reductions (https://www.staffingindustry.com/news/global-daily-news/federal-job-losses-may-top-12-million-under-trumps-staffing-reductions)

[3] American Progress - November’s Jobs Report Hints at Labor Market Weakness (https://www.americanprogress.org/article/novembers-jobs-report-hints-at-labor-market-weakness-ahead/)

[4] Yahoo Finance - Lockheed Martin, other defense stocks jump as Trump floats $1.5T defense budget (https://finance.yahoo.com/news/lockheed-martin-other-defense-stocks-221600796.html)

[5] Yahoo Finance - Lockheed Martin (LMT) Dips More Than Broader Market (https://finance.yahoo.com/news/lockheed-martin-lmt-dips-more-225005693.html)

[6] Finviz - BAH Stock Price and Overview (https://finviz.com/quote.ashx?t=BAH)

[7] GovExec - DOGE was government contracting’s biggest story of 2025 (https://www.govexec.com/management/2025/12/doge-was-government-contractings-biggest-story-2025-and-its-not-close/410427/)

[8] Fox Business - Trump’s call for $1.5 trillion defense budget would add trillions to debt (https://www.foxbusiness.com/politics/trumps-call-1-5-trillion-defense-budget-would-add-trillions-debt-crfb)

[9] MarketBeat - RTX reported a record $221 billion backlog for Q3 2024 (https://www.marketbeat.com/logos/articles/med_20250105151110_chartc-rtx.jpg)