A Fed survey shows Americans are worried about the future
of ConsumerAffairsKey takeaways:
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Inflation expectations diverged: Short-term inflation expectations rose to 3.6%, while long-term projections declined slightly to 2.9%.
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Labor market sentiment worsened: Expectations for job loss and unemployment increased, with 44% of respondents anticipating a higher jobless rate in a year.
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Household financial outlook dimmed: Income growth expectations declined, pessimism about future financial situations rose, and optimism about stock prices hit a near three-year low.
A new survey from the Federal Reserve Bank of New York reveals growing unease among American households about inflation, employment prospects, and their financial outlook.
The March 2025 Survey of Consumer Expectations, released by the Fed's Center for Microeconomic Data, indicates a significant shift in short-term inflation expectations and a sobering view of job security and personal finances.
Labor Market Concerns Intensify
Americans confidence in the labor market took a hit in March. The probability of a higher unemployment rate one year from now surged 4.6 points to 44.0%its highest level since April 2020. Job security also weakened, with 15.7% of respondents fearing job loss in the next year, a sentiment especially prevalent among lower-income households.
Earnings growth expectations dipped to 2.8%, reflecting stagnation, and optimism about finding new employment if laid off declined to 51.1%.
The survey also showed that worries about inflation are top of mind among consumers, even though inflation has moderated over the last few months. The survey showed that median one-year-ahead inflation expectations jumped by 0.5 percentage points to 3.6%, signaling renewed concerns over near-term price pressures. In contrast, three-year expectations remained steady at 3.0%, and five-year expectations ticked down slightly to 2.9%.
Consumers also reported higher anticipated price growth for essentials: food prices are expected to rise 5.2%, and medical costs 7.9%the latter marking the steepest increase in nearly a year. Expectations for rent and college expenses also rose, while anticipated gas prices fell to 3.2%.
Household finances under pressure
Financial outlooks are also worsening. Expected income growth dropped to 2.8%, particularly among those with only a high school education and households earning less than $50,000. Expectations for spending growth edged down to 4.9%.
Respondents noted tighter credit conditions, with more households reporting difficulty accessing credit compared to a year ago. Expectations for easier credit access going forward also declined.
The Fed report tracks closely to recent surveys by The Conference Board and the University of Michigan Consumer Sentiment Index, both of which show sharp declines since the beginning of 2025.
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Posted: 2025-04-15 15:03:06
