Stimulus Update: If the Jobless Rate Is So Low, Why Do We Keep Hearing About Layoffs?

It certainly reads like conflicting information.

The last time stimulus checks hit Americans' bank accounts, the labor market was struggling on the heels of the pandemic. It was March of 2021, and back then, many people were still in COVID-19 lockdown mode. And since vaccines weren't widely available at that point, many workers couldn't return to their jobs, even if they wanted to work.

At this point, it's been around two years since federal stimulus checks were issued. And by now, many people have probably given up on the idea of receiving another one.

Given that the labor market is so strong, it's hard to make the case for stimulus aid. But is the labor market really as solid as the data seems to suggest?

Conflicting information

In February, the U.S. economy added more than 300,000 jobs, and the national unemployment rate sat at 3.6%. By contrast, in March of 2021, when stimulus checks were last issued, the national jobless rate was 6%.

Now that month also saw more than 900,000 jobs get added to the economy, which is three times the number added in February. But let's also remember that back then, the economy wasn't really adding jobs so much as recovering the jobs it had shed in short order within the previous year. So it's more important to focus on that 6% unemployment rate than the number of jobs added.

Getting back to February's numbers, it's pretty clear that a 3.6% unemployment rate is not going to lend to stimulus checks. But it's hard to take comfort in that number when every time you read the news, you learn that another large company is laying off staff.

On March 20, Amazon announced that it would be cutting 9,000 jobs. That's on top of the 18,000 positions it said it would eliminate earlier on in the year. Meanwhile, just a few days later, professional services firm Accenture announced plans to slash 19,000 jobs worldwide. And the week before that, Facebook said it would cut 10,000 jobs following its mass layoff round the previous fall.

All of these layoff announcements are clearly unsettling. And they may be an indication that the most recent jobless rate doesn't tell the whole story.

Should Americans gear up for another stimulus check?

While the jobs market may be showing signs of weakness as evidenced by widespread layoffs, the reality is that current labor market and economic conditions do not support a near-term round of stimulus checks. This isn't to say that lawmakers won't turn to stimulus aid if conditions deteriorate. But unless they deteriorate rapidly and drastically, there probably won't be a stimulus round in 2023.

Those struggling with higher living costs may need to rely on measures like cutting expenses, dipping into savings, and taking on second jobs to make ends meet. While inflation has been cooling, it's still very high, historically speaking. The Federal Reserve is doing its part to bring inflation levels down, but it could be quite some time until living costs retreat to a more palatable level.