US Consumers Keep 1-Year Inflation Outlook at 3.2%...4 in 10 Report "Worsening Finances"

New York Fed Consumer Expectations Survey
November Inflation Expectations Hold Steady at 1, 3, and 5 Years
Household Financial Anxiety Grows

Inflation expectations among American consumers remained generally stable last month, while employment prospects improved further. However, the survey found that households' perceptions of their financial conditions have deteriorated.

Consumers are pulling shopping carts in front of a Walmart store located in North Bergen, New Jersey, USA. Photo by Reuters Yonhap News Agency

According to the November Survey of Consumer Expectations released by the Federal Reserve Bank of New York on December 8 (local time), the one-year-ahead inflation expectation was recorded at 3.2%, unchanged from the previous month. The three-year and five-year inflation expectations also remained at around 3% each.

Employment prospects improved noticeably, despite recent signs of a slowdown in the labor market.

The proportion of respondents concerned about the possibility of losing their jobs within the next year fell by 0.2 percentage points from the previous month to 13.8%, marking the lowest level since December of last year. The probability of voluntarily quitting a job dropped by 1.1 percentage points to 17.7%, the lowest since February. The share of respondents expecting the unemployment rate to be higher in a year also edged down from 42.5% in October to 42.1% in November. Meanwhile, 47.3% of respondents believed they could find a new job within three months if they lost their current one, up 0.5 percentage points from the previous month, though still below the 12-month average of 49.8%.

In contrast, households' perceived financial situations worsened. The proportion of respondents who said their current financial situation was worse than a year ago rose to 39%, the highest level in two years. The likelihood of failing to repay debt within the next three months increased by 0.6 percentage points from the previous month to 13.7%, exceeding the recent 12-month average of 13.3%.

These survey results were released ahead of the Federal Open Market Committee (FOMC) regular meeting scheduled for December 9-10, where the Federal Reserve will decide the benchmark interest rate. While concerns over a cooling labor market have led to widespread expectations that the Fed will cut rates by 0.25 percentage points, some committee members remain cautious about further easing, as inflation continues to significantly exceed the Fed's 2% target. In particular, ongoing concerns that President Donald Trump's tariff policies could push prices higher in the long term have kept market vigilance over inflation expectations elevated.

The Federal Reserve Bank of New York explained, "Households' inflation expectations showed no change in either the short or medium-to-long term," adding, "While labor market expectations improved slightly, perceptions and expectations regarding current and future financial conditions became more negative."