Fewer households expect to be better off a year from now, according to a New York Federal Reserve survey released Wednesday. One-year inflation expectations climbed to their highest level since May 2023, and an analyst says the outlook likely means tough choices ahead for many families.
Americans are growing more worried about their financial outlook as expectations build that inflation could worsen in the year ahead, according to a New York Federal Reserve survey released Wednesday. The Federal Reserve bank's monthly Survey of Consumer Expectations polls a rotating panel of about 1,300 household heads.
Inflation expectations hit a multi-year high
The survey found that consumers expect inflation to be even higher a year from now, the highest one-year reading since May 2023. Perceptions of households' own financial standing deteriorated at the same time.
More households surveyed said they were worse off financially than a year earlier, and more expected to be in a weaker financial position over the next year, the New York Fed found. Still, income and spending growth expectations both increased in the same survey.
Matt Schulz, chief credit analyst at LendingTree, said the glum inflation outlook likely means many families expect to make sacrifices and tough choices in the months ahead.
Gas prices add to the pressure
Other data point to the same squeeze. Gas prices rose nearly 4% in August and were up more than 27% from August 2025, according to the consumer price index. Consumers paid a national average of $4.37 a gallon as of Wednesday, up from about $3.12 a year earlier, AAA data show.
According to CNBC: Heather Long, chief economist at Navy Federal Credit Union, said "American consumers are feeling the squeeze." She added that spending stayed strong in August, but income growth isn't keeping pace, so many people are dipping into savings or using credit to keep spending — a pattern she called unsustainable.
Analysts flag downside risk
Bank of America Global Research analysts said in an Oct. 1 note that consumer spending keeps defying expectations of a slowdown. However, they warned the surge in gas prices could weigh on discretionary spending and likely hit lower-income households hardest, and could also feed through to food inflation.
Source: CNBC
Trading involves risk.
Risk Disclaimer
