In a recent survey conducted by the Federal Reserve Bank of New York, U.S. consumers have displayed growing apprehension about a potential increase in unemployment.
What Happened: The survey, carried out in March, showed Americans attributing a 44% chance to the country’s unemployment rate being higher a year from now. This is the highest level seen since the initial stages of the pandemic in April 2020, reported CNN.
The survey also revealed a growing insecurity among people about their job stability, with the perceived likelihood of job loss in the coming year rising to 15.7%, a peak in the last 12 months.
Despite the pessimistic sentiment, the broader economy continues to display resilience according to more objective data. However, the fear is that these negative outlooks could trigger a reduction in spending, resulting in a deceleration of the broader economy.
The survey also highlighted a significant rise in short-term inflation expectations, which jumped 0.5 percentage points to 3.6% -- the highest in a year and a half. Economists have cautioned that escalating trade conflicts and aggressive tariff policies could result in higher consumer prices and potentially reignite inflation.
Despite the apprehensions for the upcoming year, long-term inflation expectations remained stable at 3% for the three-year horizon and decreased slightly to 2.9% for the five-year mark.
SEE ALSO: Jensen Huang Praised By Trump: Nvidia ‘Wouldn’t Be Doing’ $500 Billion AI Infrastructure Commitment Without Tariffs
Why It Matters: This survey comes on the heels of a strong March jobs report in early April, which saw nonfarm payrolls surge by 228,000, significantly surpassing economists' forecasts of 135,000. However, the positive jobs report did little to quell fears of a global trade war and its potential impact on the economy.
Furthermore, the Consumer Confidence Index fell by 7.2 points to 92.9 in late March, marking its fourth consecutive monthly decline and the lowest reading since late 2022, according to data released by The Conference Board. This decline was largely driven by fears of inflation, stock market volatility, and tariff-driven price hikes.
Meanwhile, Federal Reserve Governor, Christopher Waller warned that President Donald Trump‘s tariffs could spike short-term inflation but that would be temporary.
These factors highlight the growing disconnect between the actual economic data and consumer sentiment, which could have significant implications for the economy moving forward.
- READ MORE: Speaker Mike Johnson Says Government Must ‘Eliminate People On Medicaid’ Who Are ‘Not Actually Eligible To Be There’
Image via Shutterstock
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
