U.S. labor market uncertainty intensifies… "I don't have confidence to find a new job"

New York Federal Reserve Bank survey: job-search confidence at a record low of 44.9%

Sharp drop in corporate hiring, worsening unemployment outlook

Rising expectations of a Fed rate cut

Another sign has emerged that the U.S. labor market is faltering after August's job gains fell far short of market expectations. According to a New York Federal Reserve Bank survey, confidence in being able to find a new job if one were to lose their current job has fallen to a record low.

In the August *Consumer Expectations Survey released by the New York Fed on the 8th (local time), respondents on average answered 44.9% to the question of 'the probability of finding another job if they lose their current job.' This is a decline of 5.8% percentage points from the previous month and the lowest level since the survey began in June 2013.

This result shows that the trend from the 2021–2022 'Great Resignation' period has been completely reversed. At the time, an average of 4.5 million people left companies voluntarily each month and were confident they could easily find new jobs. At the end of 2021, a record was set with more than 4.5 million people leaving companies in a single month. Back then, job openings were overflowing while job seekers were scarce, giving workers the confidence that "they could easily find another job at any time." However, according to the U.S. Bureau of Labor Statistics (BLS), quits fell to 3.2 million in July this year, a decrease of more than 5% compared with the same period a year earlier.

Elizabeth Renter, chief economist at consumer finance site NerdWallet, told CNBC that "it is perfectly natural for consumers to feel negative about job opportunities," noting that "it is very difficult to find a job right now, and the chances of improvement in the short term are small." She explained that "with firms sharply cutting new hires, workers are in a situation where they cannot leave their current jobs and are holding on."

During the COVID-19 pandemic, demand for workers surged, creating more than two job openings per job seeker and intensifying supply-demand imbalances that fueled job changes, but now the hiring market has effectively stalled and the mood has completely changed.

So far, there are few signs of large-scale layoffs by companies, but the sharp drop in new hiring is pointed out as a problem. Amid uncertainty over inflation and slowing economic growth, firms are cautious about expanding employment, leaving workers in their current jobs.

The New York Fed survey reflected the same trend. The probability of voluntarily quitting one's job within the next year was 18.9%, almost unchanged and 0.1 percentage points lower than the previous month. Meanwhile, the share expecting a higher unemployment rate in one year rose to 39.1%, up 1.7 percentage points from July. This is higher than the recent 12-month average.

Markets are increasingly expecting that, in response to the deteriorating labor market, the U.S. central bank (Fed) will embark on its first rate cut since December 2024 ahead of the policy rate decision on September 17.

New York=Park Shin-young, correspondent nyusos@hankyung.com