Medium-Term Inflation Expectations Dip, FRBNY Reports

(Illustration courtesy of Goran Grudić via pexels)

U.S. households’ inflation expectations decreased slightly at the medium-term horizon and remained unchanged at the short- and longer-term horizons, the Federal Reserve Bank of New York reported.

The Federal Reserve Bank’s Center for Microeconomic Data released its Survey of Consumer Expectations report for August. The main findings include:

Inflation

Median inflation expectations at the one-year and five-year-ahead horizons were unchanged at 3.6% and 3.0%, while they decreased at the three-year-ahead horizon by 0.1 percentage point to 3.2%. The FRBNY reported that median inflation uncertainty–the uncertainty expressed regarding future inflation outcomes–increased at the one- and five-year horizons and decreased at three-year horizon.

Median home price growth expectations decreased by 0.2 percentage point to 3.0%, just below its 12-month trailing average of 3.1%. “The decrease was driven by those living in the Northeast,” the report said.

Labor Market

Median one-year-ahead earnings growth expectations ticked up by 0.1 percentage point to 2.9% in August, the report said. The series remains above its 12-month trailing average of 2.6%.

Mean unemployment expectations–the mean probability that the U.S. unemployment rate will be higher one year from now–increased by 1.6 percentage points to 44.4%, its highest reading since April 2020. “The increase was broad-based across age, education, and income groups,” the report said.

Household Finance

The median expected growth in household income remained unchanged at 3.0% in August. “The series has been moving in a narrow range between 2.8% and 3.0% since June 2025,” the FRBNY said.

Median one-year-ahead household spending growth expectations increased by 0.3 percentage points to 5.2%, above its 12-month trailing average of 5.0%. “Perceptions of credit access compared to a year ago declined, with the net share of households reporting it is harder to get credit increasing,” the report said. “Expectations for future credit availability also deteriorated, with a larger share of respondents expecting it will be harder to obtain credit in the year ahead and a smaller share expecting it will be easier.”