The job market has historically been one of the biggest predictors of consumer spending and debt patterns. The unemployment rate has risen from 3.4% in April last year to the current 4.2%, but historically speaking, that is still low. Last spring, 3.4% reads were the lowest since 1969. Even today’s unemployment rate of 4.2% is thought to be roughly consistent with full employment.
Of course, there were some confusion headlines connected to the labour market. US employers cut 275,240 jobs in March, making this particular tracker the third cut since 1989, with any month since May 2020. Challenger, grey and Christmas.
Even if you are not among those currently unemployed, you may be worried about your job amid recent financial uncertainty. The best time to take steps to prepare yourself for a period of unemployment is before it happens. Below are some actions to consider now to prepare for the possibility of future unemployment.
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Promote emergency savings
Ideally, everyone is safely hidden six months’ worth of expenses in the bank (less if you’re a single bread winner or working in a specialized industry, you’ll be less if you have access to multiple sources of income). Of course, saving on buildings is easier than ever. According to Bankrate’s 2025 emergency savings report, nearly six in 10 Americans have emergency savings, saving just 28% of their expenses.
But you have to start somewhere. If you don’t have any savings now, focus on putting your first $500 or $1,000 aside. That alone is enough to pay for the necessary expenses, including health, car, home insurance and more. Work to build additional savings by sending money from all payrolls High-yield savings account.
Consider applying for a new credit card
While there is no substitute for the emergency savings fund, many people rely on credit cards when unexpected costs appear. In fact, the emergency savings survey found that only 41% of US adults pay $1,000 in emergency costs from their savings, compared to a quarter (25%) of the people pay with a credit card.
It is certainly a good idea to establish and add an emergency savings account, but it is also true that credit cards can be useful in a pinch. Of course, you need to be careful. Credit card interest charges can be very expensive and people can spend excessively when using their credit cards. However, access to credit is important and many people can purchase groceries, gas and other essentials. I don’t want you to borrow credit card debt, but if you’re not preparing unexpected expenses, making sure you have access to your credit can be a valuable lifeline.
However, remember that the best time to apply for a credit card is when you have a stable income. If you are worried about future unemployment, you can consider applying for a card now if you are likely to get approved. Consider a card that doesn’t have a yearly salary, perhaps a cashback reward. Get rewards, pay your balance, know when the season of unemployment arrives and when savings can’t fully cover the gaps, and it’s available.
Please know that help is available
Lenders have a hard work program that can help customers in need. Maybe there was a loss of work, divorce, natural disaster, or other reasons that could affect your ability to pay your debts. Lenders can sort due dates and sometimes they can skip one or two payments without penalty. It’s not harmful to ask. They may be willing to work with you in some accommodations that will make it easier for you to return to your feet. Speaking before your account goes can drive away any damage to your credit score. By providing advance notice, it is more likely that the lender is willing to provide some relief.
Details of the current employment market
Whenever you’re talking about the most unemployment since the Covid-19 pandemic, it’s getting your attention. Efforts to limit government efficiency and federal workforce have affected federal employees significantly, with retail and technology being the most prominent industry affected by recent private sector layoffs.
The little good news is that Long-term unemployment rate It remains fairly low, suggesting that recently separated workers are finding new jobs relatively quickly. I continue to believe that the job market and the economy as a whole are better than many people believe. in spite of Downbeat consumer sentimentthis can be mainly due to the fear that the cost of living is high and tariffs will make the situation worse.
Some of this slowdown is due to design Federal Reserve System We have raised interest rates significantly to beat inflation. The policy is mostly working, but it’s slower than many hoped or expected. And it has resulted for borrowers (including the best ones) Credit card fee (It was recorded last summer and with minimal relief since). However, the latest tariff announcement on April 2 launched a new wave of uncertainty, broader and deeper than most observers expected. Despite these higher cost pressures, can inflation continue to decline? Are consumer spending resilient enough to avoid a recession?
The relationship between work and loan delinquency
According to the Fed, credit card delinquency rates have increased from 1.53% (low) in the second quarter of 2021 (the lowest since this dataset was launched in 1991) to 3.24% from 1.53% (low) in the second quarter of 2024 (the highest since 2011). It has slightly extended tail over the past two quarters.
Credit card charging (invoices are invoiced as the issuer wrote them down as losses) reached 4.74% in the third quarter of 2024, the highest since 2011 and a slight decline in the fourth quarter of 2024. Traditionally, there has been a close relationship between unemployment and charging rates. It makes sense because you cannot get blood from stones. Without the money that households will come in, they may not be able to pay their bills. And because credit cards are unsecured liabilities, they are often one of the first unpaid invoices. Suffering households are usually more likely to prioritize shelter and transportation.
That said, credit card issuers don’t seem particularly concerned about the current rate of delinquency. They see primarily an increase from the past few years in the context of normalization after exceptional lows during the pandemic (as many consumers used stimulus funds to pay off their debts, so fewer money was spent). It’s nice to see that the delinquency rate has been leveled. Lenders seem to be sure the worst is behind us, but they don’t know that based on the number of commentators who predict a downward consumer sentiment and recession.
Conclusion
The economy is in a better shape than many people realize, but there is a lot of uncertainty. Salaries were expanded in March with robust 228,000 jobs, but given the latest tariff announcements, it already feels like a different era. Higher prices can squeeze already trained consumers and delay the company’s employment and investment plans. Are customs duties a straw that breaks the proverb camel’s back?
That’s all you can control. And it’s not worth doing too well with everyday political discourse. Keep your course with long-term investments despite the short-term volatility improvements. And practice important fundamentals like boosting your savings, looking at your spending, and paying off high-cost debts. These practices will help you in all economic climates.
