Coronavirus has people in US worried about their jobs: NY Fed

More than half of the people surveyed now expect the US unemployment rate will be higher one year from now.

Department Of Labor As Jobless
The US Department Of Labor is poised for a historic surge of unemployment clams a coronavirus layoffs grow [File: Al Drago/Bloomberg]

The economic toll of the coronavirus pandemic hit home for people living in the United States last month. US consumers are bracing for job losses, anticipating spending cuts and growing increasingly pessimistic about their ability to cover bills, according to data released by the Federal Reserve Bank of New York on Monday.

Expectations worsened dramatically throughout the month, with concerns growing after the first death from COVID-19 in the US and after the World Health Organization officially declared a pandemic and more drastic steps were taken to limit the spread of the disease.

Expectations for household spending growth slid sharply in the third week of March. Spending growth expectations among surveyed households dropped 0.9 percentage points below its 12-month trailing average to 2.3 percent. The share of people who expect to be worse off a year from now increased to “well above” 40 percent by the end of the month, the survey found.

More people feared job losses as a growing number of non-essential businesses shut down across the country, and residents were asked to stay at home.

Expectations that the unemployment rate will be higher one year from now jumped to an average of 50.9 percent in March, the highest since the survey launched in 2013 and up from 34.2 percent in February.

The chances of losing a job in the next 12 months increased to 18.5 percent, up nearly 5 percentage points from February and another series high. The rise in fears about losing a job was “broad based” and noted by workers across levels of education, the survey found. Those with a college degree reported the largest increase, making them as nervous about becoming unemployed as those with less education, the findings showed.

Consumers became less confident in the chances of finding new work after losing a job, with the mean perceived probability of finding a job dropping to 53.0 percent in March from 58.7 percent in February.

Americans also became more concerned about their ability to access loans or to keep up with debt payments. Some 38.8 percent of households said they expect it will become more difficult to access credit over the next 12 months, compared with 28.3 percent in February. The perceived chances of missing a minimum debt payment over the next three months increased to 15.1 percent, above the 12-month trailing average of 11.6 percent. The survey of consumer expectations is a monthly poll based on a rotating panel of 1,300 households. The survey was conducted from March 2 to March 31.

Median inflation expectations for the next year were unchanged at 2.5 percent, but there was a significant increase in uncertainty about what price changes would look like in one year or in three years.

Source: Al Jazeera, News Agencies