US consumers more secure about jobs but earnings expectations drop: New York Fed survey

[WASHINGTON] US consumers are more optimistic that the worst of the economic crisis sparked by the coronavirus pandemic is behind them, but are still concerned about their earnings and their ability to find new jobs if they become unemployed, according to a survey released on Monday by the New York Federal Reserve.

Workers became less concerned about becoming jobless, with consumers saying there was a 15 per cent chance that they would lose their jobs in the next year. That dropped 3.6 percentage points from May and is the lowest since February, when consumers registered a 13.8 per cent chance of losing their jobs over the next 12 months.

Consumers also expressed more confidence in their ability to pay their bills. The probability of missing a debt payment in the next three months dropped to 9.8 per cent in June, the lowest since the survey launched in 2013 and down substantially from 16.2 per cent in April.

The shift mirrors one in the labour market. The US unemployment rate surged to 14.7 per cent in April as businesses across the country shut down to limit the spread of the virus. As some businesses re-opened and hired workers back, the jobless rate declined to 11.1per cent in June. However, more than 32.9 million people were collecting unemployment checks in the third week of June, suggesting it could take the labour market years to fully recover from the pandemic.

Despite the tepid optimism, workers lowered their expectations for future earnings - with low-wage workers expecting the slowest growth.

The median expectations for how earnings would grow over the next year dropped to 1.6 per cent in June from 2.0 per cent in May, hitting a series low. Workers earning less than US$50,000 a year, and those without college degrees, expected earnings growth to slow the most.

The survey of consumer expectations is a monthly poll based on a rotating panel of 1,300 households.

REUTERS