U.S. Unemployment Worries Are Rising Among Americans—Why Economists Still See Job Market Stability

Key Takeaways

• Opinion polls show the public believes the job market will worsen in the coming year, with one measure of pessimism reaching its highest level since April 2020 in August.
• Professional forecasters see the job market as stable, predicting the unemployment rate will only inch up.
• The disconnect is one of several ways in which the public is much more downbeat about the state of the economy than the hard data indicates.

Is the job market going to fall apart in the coming year? Experts and the public sharply disagree on the outlook.

Consumers remain unusually pessimistic about the job market. On average, respondents to the Federal Reserve Bank of New York’s Survey of Consumer Expectations put the chance that the unemployment rate will be higher a year from now at 43.9% in September, according to results published earlier this month. That’s down from 44.4% in August, the highest since April 2020, when the economy was being ravaged at the beginning of the pandemic.1

Experts, by contrast, see the job market as stable. A survey of 32 professional forecasters released by the Philadelphia Fed in August put the unemployment rate at 4.3% in 2027, just a touch above September’s 4.2% and relatively low by historical standards.2 And in an October survey of economists by The Wall Street Journal, the average forecast put the unemployment rate at 4.19% at the end of 2026 and 4.21% at the end of 2027.3

What This Means for The U.S. Economy

Either households are overestimating the likelihood of a deterioration in the job market in the coming months, or they see something in their own experiences that the hard data has missed.

The survey was the latest sign of a disconnect between expert and public opinion about the economy.

Hard data has shown the economy staying resilient against a series of shocks from tariffs and the Iran war’s high energy prices, while consumers have grown more downbeat about inflation, jobs, and personal finances (even though they’re still spending plenty of money).

The surveys are a snapshot of how the public feels about a “low-hire, low-fire” job market, where it’s hard to find a job if you don’t have one and hard to switch if you do. In August, the quits rate was 1.9%, tied for the lowest since June 2020.

Are the grim public opinion polls a canary in the coal mine for a job market downturn? Fortunately for job-seekers, the public was wrong the last time it anticipated an unemployment wave.

Sentiment in the New York Fed survey was at the same level in October 2013. At that time, 7.2% of the workforce was unemployed. A year later, that rate had fallen to 5.7% as the recovery from the Great Recession gained momentum.4

Article Sources

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1. Federal Reserve Bank of New York. “Expectations of higher unemployment.”
2. Federal Reserve Bank of Philadelphia. “Survey of Professional Forecasters.”
3. Wall Street Journal. “Economic Forecasting Survey.”
4. Bureau of Labor Statistics via Federal Reserve Economic Data. “Unemployment Rate.”