The likelihood of securing employment in the US has dropped to a historic low of 44.9%, according to the New York Fed’s Survey of Consumer Expectations. Renaissance Macro Research pointed out this shift in labour market risks, focusing on hiring difficulties rather than job losses.
While the chances of losing a job have not seen a drastic change, the potential for finding new employment if laid off has significantly decreased. This decline in job-finding expectations brings into question the strength and stability of the employment landscape in the US.
Crack In The US Labor Market
Given the record low 44.9% probability of finding a new job, we see a significant crack in the US labor market’s foundation. While the fear of job loss is low, the sharp decline in hiring confidence suggests a coming slowdown in consumer spending. The latest August 2025 jobs report, which showed a weaker-than-expected gain of only 115,000 jobs, supports this cautious view.
This shift in consumer sentiment makes defensive positioning in the equity markets prudent over the next few weeks. We should consider buying put options on consumer discretionary ETFs like the XLY, as households will likely pull back on non-essential spending first. Looking back at the periods before the 2008 downturn, similar erosion in consumer confidence preceded a wider market correction.
The data also heavily influences our view on the Federal Reserve’s next move. With hiring risks now outweighing layoff risks, the odds of a rate cut before the end of the year have increased substantially; market pricing now implies a nearly 60% chance of a cut at the November FOMC meeting. Traders should look at Fed Funds futures or options on treasury ETFs like TLT to position for a more dovish central bank policy.
Market Volatility Expectations
This growing uncertainty is a clear signal to expect higher market volatility. The VIX, which has been hovering around a relatively calm 16, is likely undervalued given this new forward-looking risk to the economy. Buying call options on the VIX for October and November 2025 expirations could be an effective hedge against a potential spike in market turbulence.
