Households Put a 45.3% Chance on Higher Unemployment, the Most Since 2020
Americans are more worried about the job market than at any point since the pandemic. Households put a 45.3% chance on the US unemployment rate being higher a year from now, according to the New York Fed's October Survey of Consumer Expectations, up 1.4 percentage points from September and the highest since April 2020. Consumers are bracing for the labor market to crack while prices stay stuck. The rate debate has its own history.
Fear of the job market outweighs fear for their own job
The increase was driven by respondents without a college degree. Their own jobs feel safer than the economy does. The chance people see of losing their job in the next 12 months rose 0.4 percentage points to 13.9%, still below its 12-month average of 14.3%.
Confidence about landing new work improved, with the odds of finding a job after a loss up to 46.5%, the best reading since November 2025. The expected quit rate slipped to 19.4%, though it remains above its 12-month average of 18.4%.
Households See Unemployment Rising More Than Their Own Job Loss
New York Fed Survey of Consumer Expectations, October 2026, %
Bar chart. %. Higher Unemployment Rate: % 45.30%. Prob. of Finding Job: % 46.50%. Expected Quit Rate: % 19.40%. Prob. of Job Loss: % 13.90%.
The data keeps beating the mood
The survey ran through all of October, the same month the labor market delivered a positive surprise. The government reported a gain of 165K jobs in October against forecasts near 60K, and the jobless rate eased to 4.1%.
Revisions to earlier hiring data were strong too. Fed officials have described the labor market as low-hire, low-fire, meaning few people are hired, and few are let go. That helps explain why expectations of finding a job improved even as fear of broad layoffs climbed.
Politics likely shaped the mood. The survey was taken in the run-up to midterm elections that produced broad Democratic gains, with voters citing the cost of living.
Prices that refuse to move
Inflation expectations stayed put. Median readings were 3.9% one year ahead, 3.3% three years ahead, and 3.0% five years ahead, matching September at all three time frames. The tariff effect on goods prices has its own history.
The details looked worse than the headline. The expected rise in rents over the next year jumped 0.9 percentage points to 7.7%. The expected rise in medical care costs climbed to 9.3%, and the expected rise in gas prices eased to 4.2%.
Income expectations are falling behind. Median expected household income growth slipped to 3.0%, while expected spending growth sits at 5.3%, still above its 12-month average of 5.0%.
Households Expect Inflation Above Target at Every Horizon
Median inflation expectations by horizon, October 2026, %
Line chart. %. 1-Year: Inflation Expectation (%) 3.90%. 3-Year: Inflation Expectation (%) 3.30%. 5-Year: Inflation Expectation (%) 3%.
Source: Federal Reserve Bank of New York, Reuters
Debt stress stands out
The sharpest move in the report came from household finances. The average chance households see of missing a minimum debt payment in the next three months rose 1.6 percentage points to 13.8%, the highest since December 2025. Credit delinquencies have their own warning signs.
Households' views on getting credit were unchanged, and they rated their current finances slightly better than in September.
Savers see relief coming. The chance that savings account rates will be higher in 12 months rose to 31.6%, the highest since April 2023.
What a Fed rate hike does next
October's consumer price index report is due Tuesday, the day after the survey. Economists expect the monthly rise to cool from September's pace, with energy costs doing much of the work. Only the monthly change will be published for October, because the 2025 government shutdown disrupted last year's data collection.
Money markets tracked by LSEG show a 75% probability of a quarter-point rate increase at the December meeting. That would land just as households budget for higher borrowing costs and weaker hiring, and the delinquency reading suggests some are already running short.
