American workers showed growing confidence in May, with the expected quit rate surging to 20.8 percent — the highest since February 2023 — according to the Federal Reserve Bank of New York's latest Survey of Consumer Expectations. At the same time, one-year inflation expectations edged down to 3.5 percent, while other labor market measures, including the perceived probability of finding a new job after a loss, weakened.. the survey, drawn from a rotating panel of approximately 1,300 household heads and conducted from May 1 to May 31, offers a nuanced view of the shifting economic landscape.

Expected quit rate hits 20.8% — highest since February 2023

The expected quit rate climbed by 2.6 percentage points from April, reaching its highest level in over a year,as reported by the New York Fed's Center for Microeconomic Data. The increase was broad-based across age groups, education levels, and income brackets. A worker's willingness to voluntarily leave a job is widely interpreted as a vote of confidence in the availability of better alternatives, and this rise signals that many Americans believe the labor market still offers opportunities for advancement.

This jump precedes the Labor Department's May employment report, which showed an increase of 172,000 nonfarm payrolls and upward revisions adding 93,000 jobs to previous months, with the unemployment rate holding steady at 4.3 percent. The combination suggests that despite some cooling, the jobs market remains resilient enough to encourage job-switching.

Why the job-finding probability dropped to 43.7%

Despite the rising quit intentions, the survey also revealed a significant decline in the perceived likelihood of finding a new job after losing one. That probability fell by 2.3 percentage points to 43.7 percent — the lowest reading since December 2025 and well below the 12-month average. According to the New York Fed report, this weakening may be linked to the central bank's shift away from an easing bias, implying that interest rates will stay elevated for an extended period, which can dampen hiring activity.

Concerns about artificial intelligence affecting job security may also be weighing on respondents' outlook,the survey noted. This creates a notable tension: workers feel confident enough to quit, yet they are less confident they could quickly find another job if forced to. The divergence is a sign that the labor market is not uniformly robust.

Inflation expectations edge down to 3.5% while long-term forecasts hold steady

One-year inflation expectations slipped to 3.5 percent from 3.6 percent in April, the survey showed. Expectations for three-year and five-year inflation remained unchanged at 3.1 percent and 3.0 percent, respectively. The report also noted a reduction in the dispersion of opinions among respondents about future inflation across all time frames, suggesting growing consensus that price pressures are gradually easing but will remain above the Fed's 2 percent target for some time.

Meanwhile, expected earnings growth held steady at a median of 2.7 percent, just above the trailing 12-month average. This modest wage growth, alongside sticky inflation, means real earnings gains remain limited for many households.

Debt payment concerns rise to 12.6% amid higher-for-longer rate expectations

On the household finance side, the perceived chance of missing a minimum debt payment in the next three months increased to 12.6 percent, though it stayed just below its 12-month average of 12.9 percent.. The survey also found that access to creidt remained largely stable, but fewer households expected credit conditions to ease over the next year. This shift aligns with a higher-for-longer interest rate environment, as consumers adjust to persistent borrowing costs.

The mixed signals across the survey — rising quit confidence, lower re-employment odds, and growing debt distress — underscore the uneven impact of tight monetary policy on different segments of the workforce. as the New York Fed report indicates, worker sentiment is improving in some dimensions while deteriorating in others, painting a picture of a labor market that is healthy but not without vulnerabilities.