Consumers’ Inflation Expectations Remain at Multi-Year Highs, Straining Household Finances
The NY Fed’s October consumer survey showed one-year inflation expectations holding at a three-year high.
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Executive Summary
- Inflation expectations held. The one-year held at 3.9%, tied with September for the highest since May 2023, the three-year at 3.3%, and the five-year at 3.0% for a 14th straight month.
- Unemployment worries climbed. The mean probability that unemployment will be higher a year from now rose 1.4 points to 45.3%, the highest since April 2020, even as confidence in finding a job improved to the best since November 2025.
- Household finances showed more strain. The odds of missing a minimum debt payment jumped 1.6 points to 13.8%, the highest since December 2025, and only 7.5% of households said credit is easier to get than a year ago, tied for a record low.
The New York Fed’s Survey of Consumer Expectations is a survey I like much better than the more widely cited University of Michigan (UMich) survey because it follows the same rotating panel of roughly 1,300 household heads each month — respondents stay in for up to a year, with a similar number rotating in and out — which makes the month-to-month changes more meaningful than surveys that draw a fresh sample every wave (like UMich). It’s also about twice the size of the UMich survey (so smaller sample bias). This edition was fielded from October 1 to October 31, so before the November 3 midterm elections and last week’s AI-driven tech selloff.
Inflation Expectations Remain Elevated
Median one-year inflation expectations held at 3.9%, tied with September for the highest since May 2023. The three-year measure held at 3.3%, the joint highest since June 2022, and five-year expectations stayed at 3.0% for a 14th straight month, a joint record high for a series that began in January 2022. Nearly half of respondents (49.1%) expect inflation of 4% or more over the next year, also the joint highest since June 2023.
That’s a different read from the University of Michigan’s preliminary November survey, where year-ahead expectations fell to 4.3%, the lowest since August.
For everyday costs, gas price expectations eased six-tenths to 4.2% after three straight increases, but rent expectations jumped nine-tenths to 7.7%, the highest since June. Medical care (9.3%) and college (7.6%) rose for a third and fourth straight month, respectively, and food held at 5.5%.
Expected home price growth held at 3.0%, just under its 12-month average of 3.1%.
Job Worries Climb, but Job-Finding Confidence Improves
The mean probability that the unemployment rate will be higher a year from now rose 1.4 points to 45.3%, the highest since April 2020. The NY Fed said the increase “was driven by those without a college degree.” That came even as the unemployment rate fell back to 4.1% in October.
People were though more upbeat about their own prospects. The probability of finding a job within three months if they lost theirs rose four-tenths to 46.5%, the highest since November 2025, though that’s still well below its 55.1% average from 2013 to 2019.
The perceived probability of losing one’s job edged up four-tenths to 13.9%, still below its 12-month average of 14.3%, while the expected quit rate eased half a point to 19.4% even as quits jumped higher in the latest JOLTS report.
Expected earnings growth held at 2.6%, just below its 12-month average of 2.7% but above the 2013-2019 average of 2.3%.
Household Finances Show More Strain at the Margin
The average perceived probability of missing a minimum debt payment over the next three months jumped 1.6 points to 13.8%, the highest since December 2025. That comes after Fed data showed credit card balances jumped the most since November 2023 in September to a record high.
Perceptions of credit access were “roughly unchanged,” per the NY Fed, but just 7.5% of households said credit is easier to get than a year ago, tied with February 2023 for the lowest since the survey began in 2013, versus 48.2% who said it’s harder.
Expected household income growth slipped a tenth to 3.0%, and expected spending growth eased two-tenths to 5.3% from September’s 5.5%, the highest since May 2023, though it remains above its 12-month average of 5.0%. Spending growth also remains well above its 2013–2019 average of 3.7%, and income growth slightly above its 2.7%.
The NY Fed said perceptions of households’ financial situations “improved slightly,” with 19.8% saying they’re better off than a year ago, up from 17.9%. But 42.7% said they’re worse off, the most since May and a third straight increase.
The mean probability that savings account rates will be higher in a year rose 1.3 points to 31.6%, the highest since April 2023 and a fifth straight increase.
Households expect taxes to rise 3.8% over the next year, up a tenth and the highest since December 2025, while expected growth in government debt eased two-tenths to 9.7%. Again the survey was completed before the elections.
Finally, the mean probability that U.S. stock prices will be higher in 12 months slipped two-tenths to 40.0%, the least since May and slightly below the 2013-2019 average.
What to Watch
The NY Fed’s third-quarter Household Debt and Credit Report, out Tuesday, will show whether actual delinquencies are moving with the jump in missed-payment worries, and its SCE Credit Access Survey follows on November 16. November’s consumer survey, due December 7, will be the first taken after the midterms and the tech selloff.
New York Fed Survey of Consumer Expectations. Charts are built from NY Fed data.
