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That’s not exactly great news.
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Since mid-2022, financial experts have been warning consumers about an impending recession. And the big fear tends to largely center on job loss.
During periods of economic decline, layoffs can be rampant. And if you’re forced out of a job, it could result in a world of financial upheaval.
Meanwhile, despite a low unemployment rate, the topic of layoffs has been in the news quite a bit over the past few months. That’s largely due to a number of big names in the tech space announcing plans to lower their headcount.
But on Jan. 9, investment banking giant Goldman Sachs announced plans to lay off up to 3,200 workers this week. And that’s pretty unsettling news to absorb.
It’s not just a tech problem
Tech companies went on a hiring spree in 2021 due to the COVID-19 pandemic. Many consumers adopted habits that drove revenue to giants like Amazon and Netflix. But as people have returned to their pre-pandemic habits, tech companies have taken a hit — and have taken to reducing their headcount as a result. What’s jarring about the Goldman Sachs announcement is that we’re hearing about layoffs outside of the tech industry.
Of course, it’s hardly a secret that the stock market did terribly in 2022, and that many investors are looking at losses in their retirement plans and brokerage accounts. So it’s not totally surprising that financial firms would want to cut costs.
But still, if Goldman is making plans to cut staff, it’s hard to know which major company will be next. And it’s also hard to know whether downsizing staff will become a trend among medium and small businesses as well. That’s why now’s a good time for working Americans to make an effort to shore up their savings — and protect themselves financially in the event of a layoff.
Are you prepared to cope with a period of joblessness?
The reality is that even if a full-blown recession doesn’t strike the U.S. economy, some jobs may be on the chopping block in the near term. And it’s a good idea to prepare for that possibility by growing your savings account balance.
At a minimum, you should aim for enough money in the bank to cover three full months of essential living expenses. But the more months of income you can cover, the more financial protection you’ll buy yourself. So if, for example, your savings right now could pay the bills for three months, it’s a great idea to save enough so you can cover four months of living costs.
Of course, there are steps you can take outside of bolstering your savings to gear up for a layoff. Those include updating your resume, growing your job skills, and developing more professional connections within your industry.
But the single most important thing to do right now in light of layoff-related news and recession warnings is to give your savings account a solid lift. And so it’s a good idea to make that your priority in the coming weeks.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.
