American workers are the least confident they’ve been in over four years about finding a new job if they become unemployed, according to a new survey released by the Federal Reserve Bank of New York on Thursday.
The NY Fed’s survey showed the mean perceived probability of finding a job within three months if one were to lose their current position fell by 1.9 percentage points to 49.2%, the lowest level since March 2021. The drop in job confidence comes despite continued strength in the broader labor market.
In April, the US economy added 177,000 nonfarm payrolls, more than the 138,000 expected by economists. The unemployment rate held steady at 4.2%, suggesting resilience even in the wake of President Trump’s “Liberation Day” tariff announcements.
Read more: How jobs, inflation, and the Fed are all related
Still, workers appear wary about what lies ahead. The Fed survey found that mean unemployment expectations — the mean probability that the US unemployment rate will be higher one year from now — increased slightly by 0.1 percentage points to 44.1% last month, still holding at the highest level since April 2020.
There were, however, some encouraging signs. The average expected likelihood of becoming unemployed in the next 12 months declined by 0.4 percentage points to 15.3%, with the most significant improvement seen among individuals over 60 and those with a high school education or less.
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Meanwhile, the average probability of voluntarily leaving one’s job in the next year ticked up slightly, rising 0.2 percentage points to 18.2%. This figure remains below the 12-month trailing average of 19.7%. The modest increase was primarily driven by respondents under 40, those with a bachelor’s degree or higher, and individuals with annual household incomes under $50,000.
Despite some small signs of individual optimism, broader financial sentiment deteriorated. The survey reported a sharp decline in consumers’ expectations regarding both their current financial conditions and their outlook for the year ahead, particularly around household income growth.
These findings come amid mounting uncertainty surrounding the US economy, largely driven by the impact of President Trump’s tariff policies, which have unsettled both consumers and investors.
Some positive news emerged Thursday, however, as Trump unveiled his first trade deal since the trade war began: a limited agreement with the UK aimed at lowering barriers on goods like automobiles and agriculture, though many details remain undisclosed.
Read more: What Trump’s tariffs mean for the economy and your wallet
The lack of clarity regarding future trade deals and their potential impact on inflation and the labor market has left many businesses (and even the Federal Reserve) in a wait-and-see position.
On Wednesday, Federal Reserve Chair Jerome Powell reiterated the central bank is not in a “hurry” to cut interest rates and could “wait and see” how tariffs affect the economy.
“My gut tells me that uncertainty about the path of the economy is extremely elevated and that the downside risks have increased,” he said, later adding, “There are cases in which it would be appropriate for us to cut rates this year, there are cases in which it wouldn’t. We just don’t know.”
In addition to measuring consumer expectations on unemployment, the NY Fed survey also tracks expectations on inflation.
According to the NY Fed’s survey, one-year inflation expectations remained steady at 3.6%. However, three-year inflation expectations rose by 0.2 percentage points to 3.2%, the highest level since July 2022.
Notably, inflation slowed considerably in March, but economists caution that ongoing tariffs, along with increased levies on Chinese imports, will likely lead to faster price growth.
“This could easily be the last really good CPI day for a while,” Claudia Sahm, former Federal Reserve Board economist and current chief economist at New Century Advisors, told Yahoo Finance following the data’s release on April 10. “The tariffs that have gone into effect [but] it’s going to take time for it to show up in the data.”
Inflation data for April is set to be released early next week.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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