Europe Pulls Capital as US Layoffs Hit Great Recession Levels, Prompting Investor Flight

According to an analysis by House of El (@HouseofEl), the US labour market is signalling a significant warning. Reported data shows 108,000 layoff notices were announced in January 2026, the highest January total since 2009. The analysis suggests that sophisticated foreign investors, especially in Europe, are interpreting this rise not as a cyclical adjustment but as a leading indicator of deeper economic stress and potential consumer demand collapse.

This divergence between strong political narratives and weakening hard data is reportedly prompting a strategic reassessment of US investment risk. European institutional investors and regulators are increasingly scrutinising American assets in a manner similar to frameworks previously used for non-allied jurisdictions, concerned about systemic fragility. The report highlights declining foreign direct investment into the US and net investment outflows as evidence of early capital flight, where investors reposition funds before an official recession is declared.

The analysis draws a troubling comparison to the 2009 Great Recession but notes current conditions may be more challenging due to high interest rates, record government debt, and limited policy response options. As major companies announce substantial cuts citing structural rather than temporary reasons, there is concern that layoffs will decrease consumer spending, creating a self-perpetuating economic spiral that foreign capital is now seeking to avoid.

Source: Europe ABANDONS America - Pulls Investment as US Layoffs Explode To Great Recession Levels (Video: https://www.youtube.com/watch?v=uAksPAV2Hr8)