Americans’ Inflation Expectations Hit Highest Level Since 2023 as Their Financial Outlook Worsens: New York Fed Survey

Americans are becoming more pessimistic about their financial situation as they expect inflation to remain elevated over the coming year.

The Federal Reserve Bank of New York released its September Survey of Consumer Expectations on Wednesday, showing that one-year inflation expectations rose to 3.9%, the highest level since May 2023. The monthly survey covers a rotating panel of about 1,300 household heads.

Financial Outlook Deteriorates

The survey found that perceptions of households’ current financial situations and expectations for the year ahead both worsened. More households reported being financially worse off than a year earlier, while expectations for their financial situation over the next year also declined.

At the same time, households’ median expectations for income growth increased slightly to 3.1%, while expected spending growth climbed to 5.5%, the highest reading since May 2023. The mean perceived probability of losing a job over the next year also fell to 13.5%, its lowest level since December 2024.

The findings come as higher prices continue to pressure household budgets. LendingTree Chief Credit Analyst Matt Schulz said that the survey suggests Americans remain concerned about inflation worsening before conditions improve. He said many households are already operating on tight budgets and may face more difficult spending decisions, CNBC reported on Wednesday.

Consumers Still Spending

Navy Federal Credit Union Chief Economist Heather Long told CNBC that consumers are continuing to spend even as income growth struggles to keep pace. She said some households are relying on savings or credit to maintain spending, a trend she described as unsustainable.

In September, Moody’s Analytics Chief Economist Mark Zandi warned that wage stagnation, declining savings and rising borrowing costs were putting pressure on consumer spending.

Separate data have also shown households increasingly relying on credit-card borrowing to stretch their budgets amid persistent inflation.

The New York Fed survey showed median three-year inflation expectations rising to 3.3%, while five-year expectations remained unchanged at 3%.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image via Shutterstock