FRBNY: Short-Term Inflation Expectations Dip

(Illustration courtesy of Goran Grudic via pexels)

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

The Federal Reserve Bank of New York’s Center for Microeconomic Data’s July 2026 Survey of Consumer Expectations found that gas price growth expectations rebounded partially after a sharp decline in June. Labor market expectations were mixed; unemployment and job loss expectations deteriorated while job finding expectations improved somewhat.

Survey respondents said they feel less pessimistic about their current and future household financial situations, and expectations about future credit availability also improved.

The FRBNY said median inflation expectations at the one-year-ahead horizon decreased by 0.1 percentage point to 3.6% in July. The three-year and five-year-ahead horizons were unchanged at 3.3% and 3.0%.

Median inflation uncertainty–the uncertainty expressed regarding future inflation outcomes–decreased at the one- and five-year horizons and held steady at the three-year horizon.

Median home price growth expectations remained unchanged at 3.2%, remaining above its 12-month trailing average of 3.1%, the report said.

Looking at household finance, the median expected growth in household income remained unchanged at 3.0% in July. “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 decreased by 0.1 percentage point to 4.9%, falling slightly below its 12-month trailing average of 5.0%.

Perceptions about households’ current financial situations compared to a year ago improved, with a smaller share of households reporting a worse financial situation and a larger share of households reporting a better financial situation. Year-ahead expectations about households’ financial situations also improved, with a smaller net share of households expecting a worse financial situation in one year from now. The mean perceived probability that U.S. stock prices will be higher 12 months from now increased by 0.5 percentage point to 41.4%, the highest level of the series since April 2021.