Americans are growing increasingly concerned about the reality of a job loss, with more people looking for work and worrying about unemployment than at any time in the last decade, according to a new survey released by the Federal Reserve Bank of New York.
The survey reveals that the average American’s expected likelihood of becoming unemployed in the next four months has surged to 4.4% in July, marking the highest level since the survey began 10 years ago. This is a significant jump from 3.9% just a year ago, indicating rising anxiety about job security across the nation.
Moreover, the likelihood of employees moving to a new employer has also seen a sharp increase. In July, this likelihood climbed to 11.6%, up from 10.6% in the same month last year. This suggests that more Americans are either unhappy in their current positions or are seeking better opportunities as economic uncertainty looms.
The survey also highlights a concerning trend in the job market: a growing number of Americans are actively searching for new jobs. A staggering 28.4% of respondents reported that they have been on the job hunt over the past four weeks, the highest percentage recorded since March 2014. This marks a dramatic rise from 19.4% in July 2023, further underscoring the anxiety gripping the workforce.
This uptick in job searches comes as satisfaction with current employment conditions continues to decline. The survey noted a decrease in satisfaction with wage compensation, non-wage benefits, and opportunities for promotion at respondents’ current jobs. This dissatisfaction is occurring as the Federal Reserve grapples with signs of labor market weakness, with the national unemployment rate now at 4.3%.
Investors and economists are keeping a close eye on the situation, particularly as the Bureau of Labor Statistics (BLS) prepares to release expected annual revisions that could erase up to a million jobs from the previously reported job growth over the past year. Such revisions could have far-reaching implications for the economy and the markets.
Economists have warned that further deterioration in the labor market could trigger a broader economic downturn. Ahmed Riesgo, chief investment officer at Insigneo, expressed concern in an interview with Yahoo Finance, stating, “The problem is that we continue to see weakness in the labor market, and we think that that’s going to ultimately be what drives this market lower.” He added, “The US consumer is doing OK because they still have a job. The second that the employment market flips from one of surplus to one of deficit, which is something that we think we’re rapidly nearing, we think the US consumer, unfortunately, will falter.”
Despite these grim warnings, some recent data points offer a more optimistic view of the economy. Consumer prices have been easing closer to the Fed’s 2% inflation target, and positive retail sales data for July indicates that consumers are still spending. Additionally, consumer confidence is on the rebound, and recent filings for initial unemployment benefits have dropped more than expected.
Joe Brusuelas, chief economist at RSM, emphasized that the economy is in an unusual position following the pandemic. “We’re coming off unusual lows [in the unemployment rate] following a very unusual time during the pandemic,” Brusuelas told Yahoo Finance. He cautioned that many traditional economic indicators might not apply in the current environment, as the economy is in a “very different place.”
As the Federal Reserve prepares for its annual gathering of central bankers in Jackson Hole, all eyes are on what Chairman Jerome Powell might say about the future of interest rates. Traders are increasingly betting on a rate cut by the end of the Fed’s September meeting, with current odds leaning towards a 25 or 50 basis point cut.
James Knightley, ING’s chief international economist, noted that the Fed might need to adjust its commentary. “I think [the Fed] will have to certainly move in terms of the commentary,” Knightley told Yahoo Finance. He suggested that the Fed may need to acknowledge that inflation has slowed more quickly than anticipated and that the job market may be cooling faster than expected.
As the economic landscape continues to evolve, Americans are left grappling with uncertainty about their job prospects and the overall direction of the economy. With the possibility of interest rate cuts on the horizon, the coming months will be crucial in determining whether the U.S. can avoid a significant economic downturn.
