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Layoff

The role was cut, not you. Your job is to keep the story two sentences long and the momentum visible.

What employers are actually reacting to

Layoffs are common enough that no interviewer flinches at the fact. What they do notice is the tone and the timeline. A candidate who is still litigating the layoff sounds stuck; a candidate who describes it in one clause and moves to the work sounds employable. After six months, they also start listening for what you've been doing with the time.

Hold on to this

You were not selected out for being bad at the work. A budget line closed. Your job now is momentum, not justification.