Credit, Job Loss Perceptions Worsen As Fed Medicine Takes Toll

The rate hikes are working.

Or at least that was one interpretation of the key takeaways from the latest installment of the New York Fed’s consumer survey, released to the usual chorus of crickets on Monday in the US.

The share of households reporting that credit is either “somewhat” or “much” harder to obtain versus a year ago hit a new record.

At nearly 60%, that share topped the old record of 58.5%, set way back two months ago.

At the same time, household income growth expectations dropped to 2.9%, the least in more than two years, while perceptions of both current and year-ahead financial conditions worsened.

Notably, the average perceived probability of losing a job over the next 12 months rose to 13.8%, the highest since April of 2021, when inflation began to rise in earnest and job openings were in the process of scaling previously unimaginable heights.

As the figure above shows, the pre-pandemic average was 14.7%. So, this is more normalization than it is panic, and the increase should be contextualized by the drop in vacancies reflected in the JOLTS figures and also by higher participation and a rise in the unemployment rate.

Year-ahead credit expectations (as distinct from the “versus 12 months ago” series mentioned above) worsened too, but at 52.8%, the combined share expecting it’ll be either “somewhat” or “much” harder to obtain credit one year from now remained well below the peak which, not coincidentally, was exactly a year ago, at 57.8%.

Taken together, the responses to the updated consumer poll from the New York Fed did appear to suggest that policymakers’ efforts to bring the economy into balance are paying off. Unfortunately for Main Street, “paying off” in this context is a kind of antiphrasis — it means harder-to-obtain credit and higher perceived odds of being fired from a job.

But don’t despair. After all, American “households” (note the scare quotes) are $40 trillion richer+ compared to late 2019. To channel Raising Arizona, “You got your home and your stocks, what you want with a job?”


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