Fed Says Americans Hold Dim View of Future Job Prospects

Americans’ expectations about their ability to switch jobs is at an all-time low.

That’s according to the latest edition of The Federal Reserve Bank of New York’s Center for Microeconomic Data Survey of Consumer Expectations, released Monday (March 9).

The survey shows that the mean probability of voluntarily leaving one’s job in the next 12 months, otherwise known as “the expected quit rate,” fell by 2.8 percentage points to 15.9%, which is a new series low, according to a news release from the central bank.

Meanwhile, the mean perceived probability of finding a job in the next three months after being laid off dropped 1.6 percentage points to 44.0%, just slightly above the record low reached in December of last year.

Americans feel less confident in their earnings growth expectation, with that figure falling by 0.2 percentage points last month, just below the trailing 12-month average of 2.6%. This decline was driven by respondents 40 and older.

Mean unemployment expectations — the mean probability that the American unemployment rate will be higher in 12 months — dipped by 2.0 percentage points to 39.9%.

The survey also looked at inflation, with median inflation expectations in February dropping by 0.1 percentage point at the one-year-ahead horizon to 3.0%, while staying steady at the three-year and five-year-ahead horizons at 3.0%.

The new findings follow last week’s release of the Employment Situation Summary from the U.S. Bureau of Labor Statistics. It showed that nonfarm employment dropped by roughly 92,000 positions during February, reversing January’s gain of 126,000 jobs. The unemployment rate rose to 4.4%, representing 7.6 million Americans who are out of work, about 203,000 more than in the prior month.

It was “an unexpected turn … raising new questions about whether consumer confidence and spending power can maintain their steadiness,” PYMNTS wrote.

The surprise in the government data came against a backdrop of relatively steady measures of consumer sentiment. This included the new PYMNTS Consumer Expectations Index, which looks to gauge not just consumer sentiment about the economy but whether they believe they have the financial capacity to spend.

PYMNTS Senior Research Analyst Matt Albrecht, Ph.D., said last week that the index measures things like consumer mood as well as the constraints, obligation and “income continuity risk” that help shape behavior.

“People can feel optimistic and still behave cautiously if they don’t have room in their budget to take risks,” Albrecht said. “Confidence is ‘how I feel about the outlook’; capacity is ‘can I maintain or increase spending or absorb a shock and still pay my bills,’ and spending responds to both.”