US consumers’ inflation outlook steady as job worries rise

In August, U.S. consumers maintained their inflation expectations, with projections for both one and five years ahead remaining steady at 3.6% and 3%, respectively. This figure, reported by a New York Federal Reserve survey, showed no change from the previous month. However, concerns over employment and personal finances were on the rise among respondents.

Three-year inflation expectations saw a slight decrease, moving down to 3.2% from 3.3% in the prior month. Participants also anticipated higher gasoline prices in the coming year. Notably, the expectation for the unemployment rate one year from now reached its highest level since April 2020, coinciding with the impact of the COVID-19 pandemic on the economy. This trend was observed across various demographics, including different age groups, income levels, and education categories.

The likelihood of losing a job increased compared to the previous month, with concerns particularly rising across all demographics. Consumers also felt less likely to secure new employment if they lost their current jobs involuntarily. The survey further indicated that respondents had lower expectations for their current and future financial situations. Moreover, views on credit access, both presently and one year ahead, also declined.