Household Financial and Job-Market Expectations Deteriorate
The New York Federal Reserve’s August Survey of Consumer Expectations showed households becoming more concerned about the labor market and their own financial position.
The mean probability respondents assigned to the U.S. unemployment rate being higher a year later rose 1.6 percentage points to 44.4 percent, its highest reading since April 2020. The increase occurred across age, education, and income groups. At the same time, respondents became less confident that they could find another job if they lost their current one.
Household financial expectations weakened alongside the labor-market outlook. More respondents said credit was harder to obtain than a year earlier and expected access to become more difficult over the coming year. The perceived probability of missing a minimum debt payment during the next three months rose to 13.2 percent. Assessments of both current and future household financial conditions also deteriorated.
The signal is not the same thing as a broad deterioration in realized credit performance. The New York Fed’s second-quarter household-debt report found aggregate delinquency improving slightly, with 4.7 percent of outstanding debt in some stage of delinquency.
Why it matters
Households can continue working, spending, and borrowing while becoming increasingly worried about what comes next.
That matters because expectations can change behavior before aggregate economic measures show a major break. People who become less confident about employment, credit access, or their future financial position may delay purchases, reduce discretionary spending, avoid new debt, or hold more cash.
For the Risk Monitor, this is a watch signal. Its significance will depend on whether deteriorating expectations begin appearing alongside worsening employment, spending, delinquency, or credit-access data.
