NY Fed survey shows weakest US labor market in more than a decade
3 Min Read
US labor confidence has fallen to its lowest in over a decade as weak job creation, Trump's tariff and immigration policies, and rising layoffs fuel recession fears and pressure the Federal Reserve to cut rates.
-
Job seekers attend a job fair, Thursday, Aug. 28, 2025, in Sunrise, Fla. (AP Photo/Marta Lavandier)
An American who loses their job today has less than a 50% chance of finding new employment, according to a survey by the New York Federal Reserve, which described the weakest labor market conditions in more than a decade.
"The mean perceived probability of finding a job if one's current job was lost fell markedly by 5.8 percentage points to 44.9%, the lowest reading since the start of the series in June 2013," the NY Fed reported in its Survey of Consumer Expectations.
The study also found that fears of job loss are climbing. The perceived likelihood of being laid off in the next year inched up to 14.5%, while expectations that unemployment will be higher in 12 months rose to 39.1%.
Employment data from the Labor Department reinforced the gloomy outlook. The US economy added only 22,000 jobs in August, down from 79,000 in July and well below Wall Street's forecast of 75,000. The unemployment rate rose to 4.3%, the highest since late 2021.
Employment crunch
Analysts point to several factors behind the downturn. Businesses are cautious in the face of economic uncertainty, tariffs, and tighter immigration policies, with many firms turning to automation instead of hiring. The manufacturing and wholesale sectors have been hit hardest, while layoffs surged to nearly 86,000 in August, the highest for that month since 2020. Economists also stress demographic pressures from an aging workforce and a decline in foreign-born workers that are shrinking the labor pool.
These trends come amid growing criticism of President Donald Trump’s economic strategy. The Washington Post recently reported that Trump’s tariff-heavy “Liberation Day” initiative has weighed heavily on investment and hiring, while his immigration crackdown has reduced the foreign-born workforce by more than one million in the first half of 2025. Factory employment has already fallen by 41,000 since February, undercutting the administration’s promise of a manufacturing-led revival. Former Obama adviser Jason Furman noted that outside of formal recessions, the US labor market has not seen such weak hiring in more than six decades.
Markets now expect the Federal Reserve to intervene. Standard Chartered has forecast a 50 basis point cut in September, with other banks predicting multiple rate cuts this year as policymakers attempt to stabilize hiring and restore confidence. Trump has pressed Fed Chair Jerome Powell for deeper reductions, demanding as much as three full percentage points, while investors brace for a cycle of cuts to offset both the labor market slump and a cooling housing sector.
"Mean probability" is a mathematical measure of likelihood, the NY Fed explained, describing it as the number of favorable outcomes divided by the total possible outcomes.
Read more: Trump’s research cuts spark US job crisis
