Changing consumer expectations: the ratio of increased optimism regarding inflation and employment

The latest consumer expectations survey conducted by the New York Federal Reserve reveals an interesting shift in American attitudes. The proportion of consumers perceiving improvements in key economic areas is noticeably increasing, especially regarding inflation outlook and employment prospects.

Consumer Inflation Expectations Are Easing

The observed change in perceptions of future prices is a decidedly positive signal. Consumers now anticipate a 3.1% increase in prices over the next year, representing a significant decrease from the previous month’s estimate of 3.4%. Although this one-percentage-point decline may seem small, it has meaningful implications for perceptions of economic stability within the Consumer Confidence Index. Interestingly, when looking at long-term expectations—over three and five years—the proportion of consumers holding the same assumptions remains at 100%, meaning medium- and long-term expectations are stable at 3%.

Labor Market: Consumers Are Less Fearful of Unemployment

A particularly notable shift is in the perception of unemployment risk. Consumers have not only reduced their fears of job loss but also show a clearly higher confidence in their chances of quickly returning to work. The proportion of respondents who believe they could find a new job within three months if laid off has increased to about 46%. This indicates a significant boost in confidence in the labor market and perceived ease of employment conditions among workers.

Consumer Financial Outlook

The final part of the survey addresses consumers’ perceptions of their own financial situation over the next year. The proportion of those who believe their financial conditions will improve is roughly equal to those expecting a deterioration. This relative balance suggests that consumers are not leaning toward extreme optimism or pessimism—they are instead maintaining pragmatic, diversified views. This means society is almost evenly split in its financial outlook, with a substantial proportion of respondents remaining neutral.

Summary: Slow but Real Improvement

Data from the New York Fed suggest we are witnessing a slow but genuine increase in consumer optimism. The share of positive expectations is rising particularly in inflation and employment sectors, which could translate into increased household consumption and investment in the future. However, maintaining a balanced view of financial situations indicates that consumers remain cautious and do not plan drastic changes in their financial behavior.