NEW YORK—Households’ short-term inflation expectations edged higher in August, while confidence in the labor market fell sharply, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations.
The survey found that one-year-ahead inflation expectations rose to 3.2%, up 0.1 percentage point from July. Expectations at the three- and five-year horizons held steady at 3.0% and 2.9%, respectively. Inflation uncertainty increased at the shorter horizons, while home price growth expectations stayed flat at 3.0% for the third consecutive month.
Labor market sentiment deteriorated notably. The perceived probability of finding a new job if displaced dropped by nearly six percentage points to 44.9%—a series low since data collection began in 2013. Unemployment expectations rose, with 39.1% of respondents anticipating a higher jobless rate one year from now. Job loss fears ticked slightly upward, while voluntary job-leaving expectations eased. Median earnings growth expectations also slipped to 2.5%, at the bottom of their multi-year range.
Household finances were mixed. Expected income growth held steady at 2.9%, while spending expectations nudged up to 5.0%, remaining within a narrow band seen since February. Consumers reported slightly better access to credit than a year ago, but fewer expect future borrowing conditions to improve. The probability of missing a debt payment rose to 13.1%, though still below the recent average. Meanwhile, expectations for higher savings account rates climbed to 24.3%, and more households reported their current financial situation had worsened compared with last year.
Expectations for broader economic indicators also shifted. Respondents anticipated modestly higher taxes and lower government debt growth, while confidence in stock market gains increased to 38.9%. Taken together, the August survey highlights rising concern over job security and economic uncertainty, even as inflation expectations stabilize at the medium and longer term.