The New York Federal Reserve's latest Survey of Consumer Expectations, released Tuesday, found that U.S. consumers largely maintained their outlook for inflation in August but grew more anxious about employment prospects and their own finances.
Inflation expectations
Survey respondents projected inflation of 3.6% one year ahead and 3% five years ahead, both unchanged from July. Expectations looking three years forward ticked down to 3.2% from 3.3% in the prior month. The survey also noted that participants expected gasoline prices to rise over the next year.
Employment and job-search dynamics
Consumers' expectations for the unemployment rate one year from now rose to the highest level observed since April 2020, the survey said, a point in time when the COVID-19 pandemic severely affected the economy. The increase in unemployment expectations was evident across all age groups, income brackets and education categories surveyed.
At the same time, respondents assessed the perceived likelihood of losing their jobs as lower in August than in July. Despite that decline, the survey found that consumers believed their chances of finding new employment would be reduced if they were to lose their current positions involuntarily.
Household finances and credit access
On measures of household financial health, consumers downgraded their evaluations of both current and future financial situations in the August survey. Views on the availability of credit were also weaker, with respondents reporting declines in perceived access to credit now and one year ahead.
Taken together, the survey paints a picture of steady inflation expectations but increasing caution about labor market outcomes and personal financial resilience, alongside worries about fuel costs and tightening credit perceptions.