US Consumers’ Inflation Anxiety Cools, New York Fed Survey Reveals

Despite all of the doom and gloom surrounding the macroeconomic pressures currently being exerted on the American economy, at least one silver lining is showing through.

According to New York Federal Reserve data released June 9, U.S. consumers are holding a comparatively more optimistic view over inflation expectations over the short-, medium-, and long-term time frame.

Among those surveyed, inflation expectations fell by 0.4 percentage points (to 3.2%) for the one-year outlook, declined by 0.2 points (to 3%) for the three-year horizon, and edged down slightly by 0.1 points (to 2.6%) for the five-year forecast. These declines were consistent regardless of disagreement measures and were broadly reflected across age, education, and income groups for both the short- and medium-term horizons.

Inflation uncertainty — described as “the uncertainty expressed regarding future inflation outcomes” — exhibited a downward trend in the near term but was unchanged in the medium- and long-term time frame.

Speaking today on CNBC’s “Squawk Box,” National Economic Council Director Kevin Hassett outlined his take on the report.

“By every measure of inflation, it’s down by more than it’s been in more than four years,” Hassett said, per the news outlet.

“While the tariff revenue has been going up, inflation has been coming down, which is contrary to the story that everybody else has been saying, but very consistent with what we’ve been saying,” he added.

New York Fed data also indicated that American consumers expected broad-based decline in terms of previous year-ahead price change expectations on a variety of categories: gas (down 0.8% to a total of 2.7%), the cost of medical care (down 1.3% to a 7.4% year-ahead increase), the cost of college education (down 1.6% to a figure of 7.5%), and even rent (down 0.6% to an uptick of 8.4%). However, consumers expected a greater increase in food prices as compared to the last survey results in the year-ahead horizon, with expectations moving upward by 0.4% to rest at a total 5.5% anticipated increase.

Americans Appear Relatively Optimistic Over Future Job Market Prospects in Addition to Inflation

Opinions around the labor market and its fortunes were also probed by the New York Fed, with the results revealing at least some degree of hope about the job market’s prospects in the year to come.

Although expectations for earnings growth, the unemployment rate, and the mean perceived probability of finding a job within three months all fell short of their respective 12-month trailing averages, each showed improvement compared to the prior survey results.

Median one-year-ahead earnings growth expectations increased by 0.2% to 2.7% in May; the perceived likelihood of the U.S. unemployment rate increasing fell by 3.3% to 40.8%; and the perceived ability to regroup to find a new job if one did lose their existing position increased by 1.5% to just a little over half (50.7% of those polled said as much), signifying a general brightening of the mood among respondents in recent days.