Consumers See Worst Job Outlook Since April 2020

Consumers put a 44.4% probability on the U.S. unemployment rate being higher a year from now, the highest reading since April 2020, according to the Federal Reserve Bank of New York's August Survey of Consumer Expectations released September 8. The reading rose 1.6 percentage points month over month, and the increase cut across age, education and income groups.

The national picture contains a paradox. Respondents' perceived probability of losing their current job fell to 13.8%, the lowest since February, and the expected voluntary quit rate rose to 19.5%. Yet the perceived probability of finding another job after losing one declined 0.8 percentage point to 45.4%, just below its 12-month average of 45.5%. Translation for the individual worker: people feel safer inside their current roles but expect a harder search if they step outside them.

Income expectations offer no offset

The same survey shows households see little additional income to compensate for that risk. Median expected household income growth stayed at 3.0% in August and has held within a 2.8%–3.0% band since June 2025. Expected earnings growth edged up 0.1 percentage point to 2.9%. Meanwhile, expected household spending growth rose 0.3 percentage point to 5.2% — consumers expect outlays to keep growing faster than income.

Savings set the clock on a job search

Companion data from the August PYMNTS Consumer Expectations Index quantifies how little runway many households have. The share living paycheck to paycheck and struggling to pay bills rose from 18% to 27% over the year. In total, 19% of households said their financial lifestyle had deteriorated over the previous year, versus 7.1% that reported improvement.

Income drove the divergence. Household income had fallen for 33% of consumers whose financial circumstances deteriorated, compared with 21% of those whose circumstances remained stable. Among households whose bills became easier to manage, 44% cited higher household income.

Savings determine how long a household can operate without replacing lost earnings, and the gap is stark. Just 26% of households whose financial position deteriorated could cover more than three months of expenses from savings. The corresponding shares were 46% among households whose position remained stable and 62% among those whose finances improved. A longer, harder job search shortens the time before a household must cut purchases, draw down savings or borrow — and the exposure concentrates among consumers already struggling with monthly bills.

Credit pressure and inflation compound the math

The New York Fed found the average perceived probability of missing a minimum debt payment in the next three months rose 1.2 percentage points to 13.2%, slightly above its 12-month average. More respondents said credit was harder to obtain than a year earlier, and expectations for credit availability over the coming year deteriorated.

Inflation remains in the calculation. Median one-year inflation expectations held at 3.6% in August, five-year expectations held at 3.0%, and three-year expectations declined 0.1 percentage point to 3.2%. Consumers expected higher price growth for gas, food, medical care, college education and rent.

PYMNTS Intelligence adds a measure of fragility: 28% of households encountered an unexpected expense of at least $1,200 during the previous 90 days. Among consumers living paycheck to paycheck and struggling to pay bills, 35% carried their largest such expense on a credit card balance, 27% borrowed from family or friends, and 21% skipped or delayed another bill.

The labor market numbers add a variable that households do not need an actual layoff to feel. When another paycheck looks harder to secure, maintaining savings and limiting new financial obligations becomes more valuable — particularly for the many households holding only a few months of expenses in cash. If the New York Fed's expectations data hold, weaker job prospects will keep pressure on household balance sheets into next year even without a spike in unemployment.