U.S. consumers grew more pessimistic in July after two months of improvement
After two months of feeling slightly better about their odds in the labor market, Americans grew more pessimistic in July, according to a survey released Monday by the New York Federal Reserve.
The shift reflects the effects of fresh restrictions enacted by state and local governments to combat a resurgence in coronavirus infections. U.S. employment growth slowed considerably in July, reflecting a potential slowdown in the economic rebound. Nonfarm payrolls increased by 1.8 million jobs last month, compared to the record 4.8 million jobs added in June, the Labor Department said on Friday.
Consumers said the mean perceived probability of losing their job over the next year increased to 16% in July from 15% in June, above the 2019 average of 14.3%, according to the New York Fed survey.
The mean expectation that the U.S. unemployment rate will be higher in a year started rising again in July after falling for three straight months from the series high of 50.9% reached in March. Consumers put the odds at 39.3% in July, up from 35.1% in June.
People with jobs remained likely to stay put with their employers. The average probability that a worker would leave his job voluntarily was unchanged at 18.9%, below last year’s average of 21%.
Inflation expectations rose slightly in July, with the median expectation for the next year rising to 2.9% from 2.7% in June. The median inflation expectations for the next three years rose to 2.7% in July from 2.5% in June. Consumers below age 40 reported the biggest increases in inflation expectations.
The survey of consumer expectations is a monthly poll based on a rotating panel of 1,300 households.