There’s a new reason people feel bad about the economy

It’s official: The labor market vibes are not great.

Consumer confidence plummeted in September, according to the Conference Board’s latest update. It’s the largest tumble in sentiment since August 2021 — and workers’ experiences with and expectations for the labor market are partially to blame.

It’s a new phase of the vibecession, as concerns about the economy shift from inflation to jobs. A weaker jobs market — although one that’s still historically strong — is warping Americans’ beliefs about the economy.

When the Federal Reserve cut interest rates for the first time in four years last Wednesday, Chair Jerome Powell pointed out the sea change: “As inflation has declined and the labor market has cooled, the upside risks to inflation have diminished and the downside risks to employment have increased.”

While consumers don’t anticipate a looming recession, they’re still feeling bad about their job prospects. You might be able to chalk some of that up to the roller coaster of the white-collar job market: In 2021, money was free to borrow and firms scrambled to outbid each other, meaning Americans could relatively easily switch jobs and land raises.

However, the job market has cooled. Year-over-year, employment has gone down in the information sector, which encompasses several aspects of the technology industry, as some firms conduct layoffs and many slow hiring.

Job seekers can feel the difference. According to the Conference Board, the share of consumers saying jobs were plentiful fell from August, tumbling from 32.7% to 30.9%. At the same time, 18.3% of the surveyed consumers said jobs were hard to get, an increase from 16.8% in August. The “persistent drop” in that measure is a “clear sign that the labor market is not nearly as tight as it once was,” Wells Fargo economists Shannon Seery Grein and Jeremiah Kohl wrote in a September 24 note.

That deterioration likely reflects consumers’ “concerns about the labor market and reactions to fewer hours, slower payroll increases, fewer job openings—even if the labor market remains quite healthy, with low unemployment, few layoffs and elevated wages,” Dana M. Peterson, the Conference Board’s chief economist, said in a statement.

Consumers also anticipate more gloominess in the months ahead, according to the Conference Board; 13% expect that their incomes will decrease in the next six months — higher than the 11.7% who said the same in August.

That consumer confidence data comes as more Americans are looking for jobs. The July iteration of the New York Federal Reserve’s Survey of Consumer Expectations found that the percentage of Americans who have looked for a job over the past four weeks had reached the highest level since March 2014.

Meanwhile, Americans have been feeling less confident about their ability to find a job should they lose theirs today, according to the Survey of Consumer Expectations, with their mean probability of finding a new role tumbling since early 2023.

That makes sense when taking potential opportunities into account. Per the latest Jobs Opening and Labor Turnover Survey, there were 7.7 million job openings in July 2024 — marking a decrease of 1.1 million openings from the previous year. In July 2023, the information section had 158,000 jobs open; that number plummeted to 113,000 in July 2024.

It’s not all bad news (and vibes), though. The Federal Reserve finally cut rates, which could loosen up hiring — and make it cheaper for consumers to pay off their credit cards or land a lower mortgage rate. And workers’ investments might at least be chugging along as the stock market reaches record highs. Even so, though, it’ll take a little while for new monetary policy to trickle into daily life and the labor market.

“This is a labor market where if you have a job you like, you’re in a pretty good position,” Julia Pollak, the chief economist at ZipRecruiter, previously told B-17. “If you don’t have a job, if you’re a new grad, finding a job is actually unusually difficult — especially in the private sector outside of healthcare.”