Unemployment concerns are on the rise among American workers as fears about the labor market in March reached levels last seen during the pandemic, according to a new survey released by the Federal Reserve Bank of New York on Monday.
The NY Fed’s survey showed mean unemployment expectations among respondents — or the mean probability that the US unemployment rate will be higher one year from now — jumped 4.6 percentage points to 44% last month, the highest level since April 2020.
The average expected likelihood of becoming unemployed in the next 12 months increased by 1.6 percentage points in March to 15.7%, the highest level since March 2024. The increase was largest for respondents with annual household incomes below $50,000.
Meanwhile, the average probability of leaving one’s job voluntarily in the next 12 months ticked up only slightly, rising by 0.4 percentage points to 18%, far below the 12-month trailing average of 19.7%.
The survey, which also noted declining expectations around household income growth, comes as Trump’s tariff whipsaw has wreaked havoc on consumers’ (and Wall Street’s) expectations about the future of the US economy.
In recent months, labor market data has held up well, with March’s jobs report delivering an unemployment rate of 4.2% and 228,000 new jobs added.
But even the Federal Reserve expects a weakening of the labor market over the next few years.
The central bank recently raised its 2025 unemployment rate forecast to 4.4%, up from its prior 4.3% estimate. It expects unemployment to drop to 4.3% in 2026 and remain at that level through 2027.
Some economists on Wall Street are even more pessimistic as concerns over stagflation — in which growth stalls, inflation persists, and unemployment rises — have kept Wall Street on edge with shifting trade dynamics risking a self-inflicted recession.
Read More: What is stagflation, and how does it impact you?
JPMorgan economist Michael Feroli, for example, has maintained his forecast of a 5.2% unemployment rate for 2025.
Along with unemployment, consumers are also increasingly concerned about the inflation outlook.
According to the NY Fed’s survey, average year-ahead inflation expectations increased by 0.5 percentage points to 3.6%. Inflation expectations were unchanged at 3% at the three-year-ahead horizon and decreased by 0.1 percentage point to 2.9% at the five-year-ahead horizon.
Notably, inflation did slow considerably last month, although economists continue to caution that current tariffs — along with increased levies on China — will likely lead to faster price growth.
