Economist warns US is now in a ‘hiring recession.’ 15 things you should (and shouldn’t) do to safeguard your finances

After a year of roller coaster tariffs, mass layoffs and a record-long government shutdown, the latest jobs figures may be a warning sign that the U.S. economy is headed toward an actual recession.

Although American employers added 64,000 jobs in November, according to the latest Bureau of Labor Statistics data (1), unemployment hit 4.6% — the highest rate since September 2021.

“The US economy is in a hiring recession,” Heather Long, chief economist at Navy Federal Credit Union, wrote (2) in a post on X (formerly Twitter).

“Almost no jobs have been added since April. Wage gains are slowing. 710,000 more people are unemployed now versus November 2024,” she added, blaming “tariff impacts, AI, and cost cutting.”

Whether or not this “hiring recession,” on the heels of a structural goods recession (3), precedes a full-blown recession, a tightening job market is a good time to take a closer look at your money habits and put some financial safeguards in place.

Here are 15 moves — and missteps to avoid — to ensure your hard-earned cash keeps working for you, whatever the recession.

Financial emergencies, like a job loss, don’t send a calendar invite — they just show up.

That’s why having an emergency fund, separate from long-term investments like a 401(k), is a good idea. Parking your emergency stash in a high-yield savings account can mean the difference between stagnant cash and steady growth. While the national average savings account rate sits at 0.39% (4), high-yield accounts can offer returns closer to 4%.

Record auto debt and a recent surge in delinquencies is being taken as another possible sign of recession on the horizon. Another way to prepare yourself is to rethink your approach to debt.

While debt can feel like an anchor that keeps pulling you down, there are ways to stay afloat, such as through debt consolidation.

By rolling multiple loans into one, you’ll have fewer bills to juggle, meaning less stress and fewer chances to miss a payment. If you qualify for a lower interest rate, you can also save money in the long run.

There was a time when net worth felt like a conversation reserved for Wall Street titans. But in reality, everyone has a number attached to their financial identity. To calculate yours, start by adding up your assets, including cash in the bank, investments and retirement accounts. Then, subtract your liabilities, such as debts and other financial obligations. The result is your net worth.

During an unexpected shift in the economy or even a surprise job loss, knowing what you have — and what you owe — can help you navigate the uncertainty.

Some people turn a blind eye to how much they’re really spending, but when it comes to money, ignorance isn’t bliss — it’s just expensive. A budget isn’t designed to cut out everything from your life. Rather, it’s a way for you to set your financial priorities and make sure your money is being property allocated.

For example, one budgeting method that has gained popularity is the 50/30/20 rule, which simplifies budgeting into three categories: needs, wants and savings/investments. Instead of complicated spreadsheets, this method offers a clear framework that keeps your spending in check without taking over your life.

Inflation may be unpredictable, but your grocery bill doesn’t have to be. While you can’t hoard a year’s worth of fresh produce, stocking up on nonperishable items is a way to cushion against rising costs.

With food prices up 3.2% from last year (5) — and predicted to increase 2.7% in 2026 — every little bit of planning helps. If you’ve got the pantry space, now’s the time to grab extra staples before they get even pricier.

Talking to a financial advisor during periods of economic uncertainty is even more important.

For example, they can guide you toward investments that historically perform well during a recession. Whether it’s retirement, big purchases or adjusting long-term financial goals, an advisor can help ensure that a potential recession doesn’t derail your plans.

Read More: Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself

There’s something comforting about a steady paycheck but when the cost of everyday essentials climbs higher, a single income stream might not cut it. Having a side hustle can also provide added breathing room in a tough job market.

Americans working multiple jobs now represent 5.7% of the workforce (6), and new tax rules will mean less headache come filing time for those with casual incomes, such as from selling products online, freelancing or doing gig work. Side hustles have become the golden child of financial security.

That dream vacation, a new car or the latest tech might seem tempting, but major purchases can strain your budget when economic uncertainty is on the horizon. Before swiping your credit card, it might be worth asking yourself, is this a necessity or can it wait? Or, do you have the cash set aside, say in a sinking fund so you’re not having to take on debt for even necessary big purchases.

When the stock market starts sliding, the instinct to sell everything and cut your losses can be powerful. But selling in a panic often locks in losses that could have recovered over time. Market fluctuations are nothing new, but historically they tend to rebound — and those who stay invested usually come out ahead.

Selling at the first sign of trouble means missing out on potential rebounds, and buying back in when things “feel safe” often means paying a premium.

Your credit score isn’t just a random number and ignoring it can ruin your financial reputation, especially during a recession when lenders tighten their criteria. A poor score can mean higher interest rates on loans and credit cards, or even difficulty securing a mortgage, car loan or rental approval.

Many people assume that if they’re not actively borrowing, their credit score doesn’t matter. But even something as simple as missing a payment, carrying a high balance or using buy now, pay later payment plans can quietly chip away at it.

Some expenses are optional — your morning latte, that extra streaming subscription. Car insurance, utility bills, even phone plans — these are the nonnegotiables that can steadily drain your bank account if you’re not paying attention.

Yet, according to ValuePenguin, more than 65% of Americans don’t bother comparison shopping for better rates when their auto insurance is up for renewal (7), despite a whopping 92% of policyholders who save money when they switched companies. That means many people are overpaying simply because they haven’t looked around.

The impact inflation has on your spending is something you might not notice right away, but over time you’ll see it. For instance, what used to be a $4 cup of coffee might now be pushing $6. When you don’t adjust your budget for inflation, you risk spending more than you realize — which can slowly whittle your savings.

It might be worth starting to track price increases, adjusting spending habits and looking for ways to stretch your dollar — whether it’s switching to generic brands, meal prepping or reassessing your subscriptions.

Dipping into your retirement savings might seem like an easy solution, but cashing out early can do more harm than good. Retirement accounts, like 401(k)s and individual retirement accounts IRAs, come with early withdrawal penalties — typically 10% if you take money out before age 59½.

On top of that, you’ll owe income tax on the amount withdrawn. But, the real cost isn’t just the fees — it’s also the lost growth. Money invested in retirement accounts compounds over time, meaning an early withdrawal today could cost you thousands in the long run.

Even in a thriving economy, quitting your job without a backup plan is a bold move. When companies tighten budgets and layoffs become more common, walking away from a steady paycheck without a clear next step can put you in a tough spot.

A recession — whether it be just a hiring one, for now — isn’t the time for impulsive exits. Instead, if you’re feeling stuck or undervalued, start mapping out your next move before handing in your resignation. Update your resume, network strategically and explore new opportunities while you still have financial stability.

Lifestyle inflation can be a silent budget killer. This can happen if you get a raise or a bonus check, making spending a little easier. Whether you’re thinking of upgrading your apartment, dining out or just justifying a big purchase because you now have some wiggle room.

But if your spending rises as fast as your earnings, you’re not actually getting ahead — you’re just treading water in a more expensive pool. Instead of getting caught up in lifestyle inflation, building an emergency fund, investing more and paying off debt faster are smarter moves.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

U.S. Bureau of Labor Statistics (1); @byHeatherLong/X (2); CNBC (3); Federal Deposit Insurance Corporation (4); U.S. Department of Agriculture (5); Federal Reserve Bank of St. Louis (6); ValuePenguin (7)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.