Consumer financial confidence showed modest improvement in May, according to the latest Survey of Consumer Expectations released by the Federal Reserve Bank of New York. The data indicates growing optimism among Americans regarding their employment prospects and household finances, offering a more encouraging picture of economic sentiment heading into summer.
The perceived likelihood of losing one’s job in the next year declined to 14.8% in May, down 0.5 percentage points from April. At the same time, the probability that someone who loses a job will find new employment within three months rose 1.5 points to 50.7%, suggesting stronger confidence in the labor market’s capacity to absorb displaced workers.
This improvement aligns with broader indicators reported by the Bureau of Labor Statistics earlier this month, which showed U.S. job growth outperformed expectations, driven by gains in health care and leisure and hospitality sectors. Together, the data paint a picture of a labor market that remains resilient despite inflationary pressures and ongoing macroeconomic uncertainty.
Earnings Outlook Supports Consumer Financial Confidence
The May survey also noted an upward shift in expected earnings. Consumers anticipate their income will grow 2.7% over the next 12 months, marking a 0.2 percentage point increase from the previous month. While modest, the gain may help support household spending and reinforce overall financial stability.
More notably, consumer financial confidence appears to be strengthening when it comes to household finances. The share of respondents who believe their household’s financial situation will worsen over the next year declined to 34.3%, a two-point drop from April’s 36.3%. Although this figure is still significantly higher than the 20% recorded in December 2024, it reflects a recovering sense of security among American households.
This pattern of easing pessimism has emerged alongside other consumer indicators. In a separate housing sentiment report published by Fannie Mae, just 24% of respondents expected their finances to worsen in the coming year—down from 31% the previous month. The same report highlighted a growing belief that mortgage rates might fall, helping to bolster household budgets and purchasing confidence.
Local Relevance and Economic Impacts
In communities like El Monte, Baldwin Park, and Rosemead, where many residents work in hourly or service-oriented jobs, changes in job security expectations carry real implications. Fewer residents fearing job loss can translate into stronger local spending, improved housing stability, and greater participation in community programs.
The shift in outlook may also support local hiring efforts. As job seekers feel more confident in their ability to find work, labor force participation may increase. This could benefit area employers across retail, health care, education, and public service—sectors that form the backbone of the San Gabriel Valley economy.
At the same time, the growing belief that personal financial situations will not deteriorate could influence household decisions related to saving, investing, or entering the housing market. According to the California Association of REALTORS®, consistent job expectations and modest income growth are helping to keep real estate activity stable across much of the state.
Looking Ahead
Although economic uncertainty has not fully abated, the latest survey signals that consumer financial confidence is slowly rebuilding. Expectations regarding job retention, earnings growth, and household stability suggest Americans are adapting to current conditions and anticipating continued recovery.
For policymakers, businesses, and service providers across the San Gabriel Valley, these trends offer an opportunity to align local support programs with improved economic sentiment. Whether in housing, education, or workforce development, better-informed expectations can shape strategies that meet residents where they are—and where they hope to go.
