The recent University of Michigan consumer sentiment report reveals a concerning surge in unemployment expectations, rising from 51% in February to 66% in March. This sentiment, nearly matching the peak during the Great Recession, is startling given the current 4.1% unemployment rate. Worries about job security often lead to decreased consumer sentiment, impacting spending which constitutes roughly 70% of GDP, potentially initiating a recession cycle. Amidst contrasting recession predictions from major banks and fluctuating market conditions, anxiety over employment threatens economic stability.
One of the most notable aspects of the new University of Michigan consumer sentiment report was the number of people who expect higher unemployment in the next year. The figure was 66% for March, up from 51% in February.
Worries about job security drive drops in consumer sentiment, which is usually accompanied by a drop in consumer spending. Consumer spending is about 70% of GDP.
A rising stock market and home prices have made Americans wealthier in the last four years. However, the market has been shaky recently.
People anxious about employment can cripple an economy. That may be about to happen.
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