Sunday 26 May 2024 - 02:28

Survey: Americans Getting More Worried About Losing Their Jobs

Story Code : 1137618
Survey: Americans Getting More Worried About Losing Their Jobs
About 38 percent of Americans expect the unemployment rate to jump in the year ahead, 6 percent higher in the past five months, according to the Survey of Consumers from the University of Michigan. The survey also found that Americans are more worried about their incomes, Newsweek reported.

"Consumers expect their income growth over the next year to slow as well," according to a statement shared with Newsweek. 

"Taken together, at this time consumers expect a modest softening in labor markets, and the months ahead will reveal if these labor market expectations will continue to weaken," it added.

The US economy has shown resilience amid price increases and borrowing costs at more than two-decade highs, continuing to grow with the labor market showing strength providing jobs for workers.

The US economy grew at a 1.6 rate in the first quarter of 2024, even as high interest rates have made borrowing expensive and stifled business investment. Meanwhile, the unemployment rate at 3.9 percent in April much lower than the nearly 15 percent seen at the height of the pandemic-induced economic crisis.

But Americans feel less than stellar about the economic direction of the country.

A poll conducted by Redfield & Wilton Strategies for Newsweek last month found that 50 percent of Americans think the US economy is heading in the wrong direction, with only 25 percent believing that it is going in the right direction.

Those perceptions could be fueled by inflation at 3.4 percent, which is higher than the Federal Reserve target of 2 percent. Higher inflation—which at one point soared to four-decade highs of 9 percent—sparked the Fed's response of hiking rates, pushing up borrowing costs for things like home and auto loans.

The economy, while still growing, slowed to begin the year compared to the prior quarter, when it accelerated by 3.4 percent, according to the Commerce Department.

One reason the economy may have been growing is due to robust consumer spending. Fears over loss of jobs could threaten growth going forward.

"Strength in household incomes has been the primary source of support for robust consumer spending over the past couple of years, so a softening in labor market expectations is concerning and— if it continues—may lead to a pullback in consumers' willingness to spend," Joanne Hsu, Surveys of Consumers chief economist, said in the statement.

"Furthermore, consumers expect interest rates to remain high in the future, which will make it even more difficult for consumers to make large purchases," Hsu added.

Grace Zwemmer, an economist at Oxford Economics, told Newsweek that there were signs of "loosening" of the jobs market in April.

"A weaker pace of payroll gains, slower wage growth, and an uptick in the unemployment rate," she said on the month, adding, "In particular, the private hiring rate has been weak, which means those who are entering the job market or were recently laid off are finding it more difficult to land new jobs."

Increasingly, Americans are worried about job security going forward, Zwemmer suggested.

"Consumers are likely becoming more worried that further softening in the labor market could cost them their jobs, and land them in a position where they are unemployed for longer," she told Newsweek.

Wage growth may slow down to 3.5 percent which may contribute to inflation get to the 2 percent target by policymakers, Zwemmer added, a development that could spark a slight jump in the unemployment rate.

"However, we broadly expect the labor market to stay healthy, and remain characterized by slower hiring rather than increases in layoffs," she said.

Americans are concerned over high interest rates. In January, 37 percent expected rates to fall over the next year. That number has now plunged to 26 percent.

"This indicates that consumers expect high interest rates to persist, and indeed, worries over interest rates were visible throughout the survey," the survey said, adding, "In recent months, a rising share of consumers have blamed high interest rates or tight credit for poor buying conditions for homes and cars.”

"Interest rates were less of a concern for durable goods; in contrast, the sharp deterioration seen in buying conditions for durables was largely attributable to high prices," according to the survey.