The Fed Is No Longer Predicting a Recession, but Workers Are Less Certain

A strong labor market is drawing in workers, but pessimism over the medium-term outlook remains
Getty Images / Morning Consult artwork by Ashley Berry
August 02, 2023 at 5:00 am UTC

Key Takeaways

  • Morning Consult’s Lost Pay and Income Tracker declined again in July, falling to 10.4% from 10.6% in June. A steep drop in the incidence of lost pay among high earners drove the decline, but the monthly average for low-income adults ticked higher.

  • Job search activity has fallen in recent weeks but remains elevated among employed adults, with younger workers in particular piling into the job market.

  • Feelings of job insecurity ticked higher in July, driven by a rebound in the share of high earners expecting pay losses.

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The U.S. labor market remains incredibly resilient, even as the Federal Reserve in July pushed up its benchmark interest rate to the highest level in 22 years. Morning Consult data shows
that the incidence of lost pay or income across regions and demographics is still relatively modest as unemployment remains near historic lows.

The share of U.S. adults reporting pay losses fell to 10.4% from 10.6% in June, boding well for a labor market that continues to hum along. The incidence of pay losses among high-income adults has fallen especially rapidly in recent months.

Since a recent peak of 10.9% in the week ending May 27, the share of U.S. adults from high-income households experiencing pay losses has dropped off considerably, falling to 7.3% as of the week ending July 22. Concern about layoffs at big tech has eased, with Google search activity for the term “tech layoffs” now only 8% of where it was back in January, according to Google Trends. Additionally, the stock market and home prices have rallied in recent months, padding the incomes of wealthier households.

Pay Losses Among High-Income Households Fall Further in July

Shares of U.S. workers who lost pay or income in the prior week, by annual household income
(4-week moving average)
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Source: Morning Consult Economic Intelligence

Morning Consult’s tracker of job search activity has ticked lower in recent weeks, with the share of employed U.S. adults who are actively applying for new positions now 0.9 percentage points below the peak reached in the week ending June 3. Workers from the youngest cohort (ages 18-24) were also much more likely to be looking to make a job switch in July than they were just a few months prior.

Concerns about the work ethic and loyalty of Gen Z workers have been in the news in recent years, with an emphasis on “quiet quitting” and other workplace trends like “act your wage” and “grumpy staying.” However, while Morning Consult data shows that younger workers are less cemented to their current jobs and feel less engaged, it also suggests they are just as likely to go the extra mile at work, as discussed in our February U.S. Jobs & Labor Report.

What we do that’s different: We survey thousands of U.S. adults every day to determine labor market conditions, including lost pay, job search activity, job security and more. The enhanced scale, frequency and depth of these measurements are not captured by more traditional or legacy datasets. 

Why it matters: Our labor force calculations are simplified and standardized versions of the ones you’re already familiar with, including those used by the U.S. Bureau of Labor Statistics.

Feelings of job insecurity increased in July, with the share of employed U.S. adults expecting a loss of employment income in the next four weeks rising to 17.0%, up from 16.1% in June. The uptick was driven in large part by a sharp increase in job insecurity among high earners, despite a smaller share of this cohort reporting lost pay compared with the previous month. Volatility within this income bracket has been especially high in recent months, as macroeconomic news has been hard to interpret. Although forecasters and the Federal Reserve’s policymakers are more optimistic about the near-term economic outlook, workers feel less certain.

This memo offers a preview of Morning Consult’s August U.S. Jobs & Labor Report. Morning Consult Economic Intelligence subscribers can access the full report here.

A headshot photograph of Jesse Wheeler
Jesse Wheeler
Senior Economist

Jesse Wheeler previously worked at Morning Consult as a senior economist.

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