Increased anxiety of layoff from relocation concerns - How to process it?

A few thoughts:

• You should have significant savings ready. This is good practice always. Live below your means. Make it so that being unemployed for a reasonable period of time won't land you on the street. If this is the case for you now, hopefully that alleviates your stress. If not, start working toward this goal. You can look at resources like FIRE communities, which will help here.
• It's unlikely you both get laid off at the same time.
• You can start job hunting now. See if you can have a job lined up. You never know, you may find a job that is a better fit.
• This sounds like a mental health issue. Practical suggestions are always great to implement first, but beyond that, there are other tools for mental health. Diet, sleep, exercise, meditation, and more. The biggest help here is going to be a therapist. They can walk you through your thinking better than any answer here. If you are having palpitations, anti-anxiety medication could be important too for getting you mentally and physically healthy. Therapy would be my first step though. And, luckily, you can do it in parallel with the practical solutions (e.g. saving up money, interviewing, etc.).

David gave great practical advice for handling the situation, contextualizing the likelihood, and dealing with immediate anxiety. So, I will speak to the overarching and somewhat permanent anxiety portion as me and my partner deal with the same anxiety.

What helps with me is looking with a very long term view as then I get to take solace in reality, optimism, and positive statistics. It is most likely (as shown by many stats) that your salary will increase as you age. If they are your spouse, it is likely they will be with you forever, through all the problems. So, looking at the period of a lifetime, both of your being laid off is a small insignificant blip. Not to stay your anxiety isn't valid or proportional to the situation, but your emotions are likely calibrated to the short term, focusing on actively calibrating it to the long term helps reduce the feeling of anxiety the more often you make the effort.

If the worst happens and you both are laid off, you have a small period of no income. You either burn through some savings if you have it, or take on a little debt. You take a job you aren't as interested and live a modest life for a short period. Then, the market picks back up, you get new jobs and you rebuild savings with a higher income. So, the worst possible situation is a small portion of your life with less in the bank and less satisfying work that averages out with little long-term effects. You get the opportunity to learn how to deal with difficult situations and problems with your partner. This skill alone will have more long-term benefits than the financial cost of being underemployed. If this worst happens and it really hurts your mental health, you get a clear signal to invest more in your support network, coping skills, and overall mental health. Those skills as well will pay more long-term dividends that a little extra money would.

Thanks for sharing your worries, there are many of us and reading about someone else's experiences always helps. Just know the worst is unlikely, and even if it happens things will be fine.

Thanks both! Reading the thoughts of other people really gives a fresh and a positive perspective. It's interesting how just reading through something positive can flip the emotions instantly. Thanks a lot!