Stimulus Update: Are All of These Layoffs an Indicator That Stimulus Aid Is on the Way?

Layoffs have been in the news a lot. What does that mean for stimulus aid?

At the start of 2023, Amazon announced plans to lay off more than 18,000 workers. Since then, a number of tech companies, including Netflix and Microsoft, have followed suit.

Workers are being told not to panic. After all, the tech sector went on a hiring spree in 2021 when the world went digital, and now that people are reverting to pre-pandemic habits, some of that activity needs to be reversed.

But last week, Disney joined the ranks of major companies downsizing their staff. And that was a bit of a jolt given that Disney is clearly not a tech giant.

All of this layoff-related news is understandably disheartening. But should it get people thinking about stimulus checks?

Unsettling news, but not dire

It's never comfortable to hear about widespread layoffs, as it immediately leads to thinking along the lines of "Will I be next?" But despite so much news about layoffs, the reality is that the U.S. labor market is in pretty solid shape.

In January, the U.S. economy added over 500,000 jobs, and the national unemployment rate reached a 54-year low. So while it's true that some large companies are rethinking their staffing needs, for the most part, jobs are still plentiful.

We're not anywhere close to stimulus aid

The last round of stimulus checks to hit Americans' bank accounts was approved in March of 2021. Back then, unemployment was still high, and vaccines for COVID-19 were not yet widely available, which meant a lot of people who wanted to rejoin the workforce couldn't due to health concerns.

But we're in a very different place today, and because of that, a near-term round of federal stimulus aid seems unlikely. Of course, if mass layoffs start to pick up and unemployment levels begin to skyrocket like they did during the pandemic, then it's reasonable to assume that lawmakers might come to the economy's rescue by approving another stimulus round. But we're far away from that scenario as of now -- and that's a good thing.

Of course, just because the U.S. labor market is strong doesn't mean individuals shouldn't do what they can to shore up their finances and protect themselves in the face of layoffs. And perhaps the best way to do that is to build up an emergency fund. At a minimum, workers should aim to have enough money in their savings accounts to cover three full months of essential bills.

But three months is really the minimum. And while the economy is in good shape right now, things could change in the course of the year. So really, aiming for more like six months' worth of living expenses in the bank isn't a bad idea for the average worker, as that amounts to even more financial protection.

We could see layoffs extend beyond the tech sector as 2023 moves along. But hopefully, mass layoffs won't become a trend. And as long as layoffs remain limited to a small portion of the workforce, we shouldn't expect to see stimulus checks go out.