The latest data from the New York Federal Reserve’s Survey of Consumer Expectations, released on Monday, reveals a significant increase in Americans’ fears regarding unemployment. Those results fan the flames of building negativity among consumers. They have a lot of other concerns including the uncertain federal policy environment and the potential recession around the corner.
As the survey indicates, respondents now place a 44% probability on the nation’s jobless rate being higher a year from now. This forecast is the highest level of economic anxiety since April 2020, indicating deepening concern over financial security. The average jobholder now perceives his or her probability of losing that job within the next year to be 15.7%. That’s the highest level in 12 months.
The unemployment rate itself has hit a historic increase too, jumping 0.5 percentage points to 3.6%. This is the largest one seen in a year and a half. It contributes to the widespread fear of violence felt by Americans across the political spectrum. Today’s data highlights a wider trend of negative sentiment readings, as consumers continue to navigate an unpredictable economic environment.
Inflation expectations for the three‐year horizon have remained stable at 3%. They have come down a bit to 2.9% for the five-year projection. Even with these numbers, worries over transitory inflation have markedly increased. The New York Fed survey shows a marked increase in respondents’ near-term inflation expectations. Economists warn that continued trade tensions may further aggravate this plight.
Concerns surrounding President Donald Trump’s aggressive tariff policy loom large, as experts caution that it could lead to higher prices for consumers. The continuing trade war might push inflation to start climbing again. This confluence only compounds the fears Americans are feeling over their jobs and the overall health of the economy.
Curiously, though, as year-ahead worries about losing one’s job have ratcheted up, they seem not to bleed over into longer-run trepidation. What’s more, instead of complaining about inflation, consumers are fearful of losing their jobs right now. It could be that their expectations for the coming year are more positive than they first seem to be.