Consumer Confidence Rises Amid Mixed Economic Signals

In May, American workers showed greater confidence, despite a decrease in inflation expectations, as reported by the New York Fed’s latest consumer expectations survey released on Monday.

The likelihood of voluntarily leaving a job within the next year increased by 2.6 points, reaching 20.8 percent—marking the highest level since February 2023. This rise appears consistent across various demographics, including age, education, and income levels.

This inclination to resign is often seen as an indicator of worker confidence. When employees believe appealing job opportunities exist, they’re more inclined to leave stable positions. The New York Fed refers to this as the “expected quit rate.”

On a different note, Americans’ inflation expectations for the coming year dropped slightly from 3.6% to 3.5%. However, predictions for inflation three to five years out stayed constant at 3.1% and 3.0%. There was also a reduction in differing opinions among respondents regarding future inflation.

The survey revealed mixed insights about the job market. The likelihood of an increase in the unemployment rate within the next year decreased by 0.4 points to 43.2%. Meanwhile, the median earnings growth forecast continued at 2.7%, which is a bit above the historical average over the past year.

Still, some labor market expectations appeared less optimistic. The chances of losing a job in the next year rose by 0.5 percentage points to 15.1%, surpassing the previous year’s average of 14.4%. Additionally, the probability of finding new employment after a job loss declined by 2.3 percentage points to 43.7%, the lowest rate noted since December 2025.

This gloomy data on job security might reflect a shift in Fed officials’ approach, suggesting interest rates could remain high for a while. Workers may also be apprehensive about potential job displacement due to the rise of artificial intelligence in the workplace.

Households also exhibited varied financial expectations. While access to credit stayed relatively stable, fewer families anticipated easier credit conditions within the year. Moreover, the likelihood of failing to meet minimum debt payments in the next three months rose to 12.6%, yet still slightly below the historical 12-month average of 12.9%.

These fluctuations in credit expectations align with anticipated long-term interest rate trends. As the public’s expectation shifts away from the Fed lowering rates soon, borrowing conditions are likely not to improve in the near future.

The survey took place between May 1 and May 31. Notably, the Labor Department’s report revealed that nonfarm payrolls increased by 172,000 in May, with an additional 93,000 jobs added to previous months’ totals. The unemployment rate held steady at 4.3%.

This New York Fed survey involves a rotating panel of roughly 1,300 household heads and is compiled each month by the bank’s Microeconomic Data Center.