It just got really gloomy, really quickly, economically speaking.
Last week, Silicon Valley Bank collapsed, a stunning reversal for a well-established financial institution that had been around for four decades. It's the biggest incident of a bank collapse since 2008. Economists and lots of other business-watchers now worry this is going to spread like a fungal zombie infection and spiral us down into another economic meltdown.
What could happen next?
Is SVB the "canary in the coal mine" that could predict the drying up of venture capital and a sign that more banks could be in trouble? It sure feels like it with the dumps happening in the stock market and Meta's layoffs of 10,000 more employees (not directly related, but still bad news). Could some sort of bailout or other stabilizing action help avoid things getting worse or are we on the way to more inflation and pain for the rest of us, even those who aren't in banking or tech?
How worried should you be?
If you're heavy into trading stocks or crypto, you might want to avoid making any big moves or turn your assets liquid for a while in case things cool down.
The collapse of one bank doesn't mean the whole system is in trouble, but in times of uncertainty, it can sometimes be harder to get loans or be certain of where interest rates are going. That means if you're planning to buy a house or a car this year, or making any other major purchases, be sure you're not going to be paying much more than you planned if there's a sudden spike in interest rates.
Layoffs might be a bigger concern, especially if you work in a tech or tech-adjacent job. The current tally? About 138,000 U.S. tech jobs have been lost. Make sure you've got some savings and an exit plan in case things go south in your employment.
But most importantly, don't panic. Don't look at your 401k or retirement accounts and freak out; more than likely the pain of the markets is temporary and cyclical. In the long haul, the market will rebound and climb. (We hope!)
The best course is the most boring one: Keep saving money, watch your expenses, don't put yourself in debt if you can help it, and at least right now, don't make any huge purchases or investments unless you're absolutely sure you could handle a sudden loss of income or another 2008-style market meltdown.
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