The American people are feeling better about their own work situation but they are worried about the direction of the labor market, according to a survey released Monday by the Federal Reserve Bank of New York.
Expectations that unemployment will be higher a year from now increased from 38.9 percent in December to 40.2 percent in January, according to the bank’s Survey of Consumer Expectations. That is the third-highest reading of the year after sky-high scores in March and April. The increase was sharper among households with less than $50,000 of household income, lower education, and Americans over 60.
Yet at the same time, the probability Americans assign to losing their own job in the next 12 months fell for the third consecutive month from 15.0 percent in December to 13.6 percent in January, the lowest reading since September 2019. The decrease was more pronounced among respondents with lower education—no more than a high school degree—and less than $50,000 of household income.
In other words, some of the same demogaphic categories that see the bigger picture darkening also think they are becoming less likely to lose their own job.
Americans are also expecting to spend more. The increase of households’ expected level of spending a year from now jumped to 4.2 percent, the highest reading since June 2015. Americans also forecast their future incomes would rise by 2.4 percent, up two-tenths of a percentage point from the prior month and the highest reading since February 2020, before the pandemic struck. That suggests that American households expect to spend down some of the savings that have been accumulated during a year of social distancing, staying-at-home, and lockdowns.
“Respondents were also slightly more optimistic about their households’ financial situations in the year ahead with more respondents expecting their financial situation to improve a year from now,” the New York Fed’s report said.
The survey also found highest level of expected home price gains since May 2014 and stable inflation expectations.