Federal Reserve Survey: Consumers' inflation expectations in August remained relatively stable, while confidence in smoothly changing jobs fell to an all-time low

According to the monthly survey data released by the New York Federal Reserve on Monday, the one-year inflation expectation in the U.S. for August is 3.2%, up from 3.1% previously, while the three-year inflation expectation remains steady at 3%, and the five-year inflation expectation remains steady at 2.9%.

In terms of various categories:

The median expectation for the increase in college education costs over the next year has decreased by 0.9 percentage points to 7.8%.

The median expectation for the increase in medical costs over the next year has decreased by 0.4 percentage points to 8.8%.

The median expectation for the price increases of gasoline and food over the next year has remained unchanged for the third consecutive month, at 3.9% and 5.5%, respectively.

The expectation for rent increases over the next year has decreased by 1 percentage point to 6%.

The median expectation for home price growth has remained unchanged for the third consecutive month at 3%. Since August 2023, this series has fluctuated within a narrow range between 3.0% and 3.3%.

Despite relatively stable inflation expectations, the survey shows that Americans' confidence in their ability to find a new job has fallen to a historic low, marking the latest sign of distress in the U.S. labor market:

In the Federal Reserve's August consumer expectations monthly survey, respondents indicated that if they lost their current job, the probability of finding another job is only 44.9%. This reading dropped sharply by 5.8 percentage points from the previous month, reaching the lowest level since the survey began in June 2013.

Additionally, the probability of voluntarily leaving a job over the next year has changed little, only slightly decreasing by 0.1 percentage points to 18.9%.

Meanwhile, the proportion of those expecting the unemployment rate to rise in a year has increased to 39.1%, up 1.7 percentage points from July, and 1 percentage point higher than the average level over the past 12 months.

These results further highlight the reversal of the "Great Resignation" that occurred between 2021 and 2022. At that time, up to 4.5 million workers resigned each month, filled with confidence in finding new jobs. According to the U.S. Bureau of Labor Statistics, this number was only 3.2 million in July, far below levels from a few years ago, and down over 5% year-on-year compared to the same period in 2024.

During the COVID-19 pandemic, various factors led to a mismatch in supply and demand in the labor market, with each worker corresponding to more than two job vacancies. However, the stagnant labor market has ended this trend.

Although there are currently no signs of large-scale layoffs by employers, hiring has significantly slowed. Affected by inflation and economic growth uncertainties, employers are cautious about expanding their workforce, leading workers to choose to stay in their current positions. Currently, labor supply exceeds job demand, a situation not seen for a long time before the COVID-19 pandemic NerdWallet's senior economist Elizabeth Renter stated:

Consumers feel pessimistic about job opportunities, and this feeling is entirely reasonable. It is very difficult to find a job right now, and it is unlikely to improve in the short term. Employers are hardly hiring, so workers can only cling to their current positions because the market is not friendly to job seekers.

The Federal Reserve's latest survey results follow a disappointing non-farm payroll report for August. The U.S. Bureau of Labor Statistics reported last Friday that only 22,000 jobs were added in August, far below the expected 75,000; June's data was revised down to a decrease of 13,000, marking the first monthly decline since December 2020; the unemployment rate rose to 4.3%, and the broader unemployment rate, including discouraged job seekers and underemployed individuals, rose to 8.1%, both reaching the highest levels since October 2021.

The market widely expects that the Federal Reserve will respond to the weak labor market by implementing its first interest rate cut since December 2024 at the meeting on September 17