Tue, 18 March 2025 | consumers economy inflation
The Federal Reserve Bank of New York’s latest Survey of Consumer Expectations (SCE), for February 2025, sheds light on evolving sentiments among U.S. households regarding inflation, employment, credit access, and personal finances. While short-term inflation expectations nudged upward, broader indicators reveal growing concerns about financial stability and future economic prospects.
Households’ short-term inflation expectations inched up slightly, with the median one-year outlook rising by 0.1 percentage point to 3.1%. Meanwhile, medium- and long-term expectations remained steady at 3.0%. Notably, inflation uncertainty—how confident consumers are in their forecasts—increased across all timeframes, signaling heightened unpredictability in the economic outlook.
Home price growth expectations followed a similar modest uptick, moving to 3.3%, continuing a steady trend observed since mid-2023. Commodity price expectations also saw notable increases. Anticipated gas price growth jumped to 3.7%, the highest since June 2024, while food and rent expectations climbed to 5.1% and 6.7%, respectively. Medical care and college costs are also projected to rise, with anticipated growth of 7.2% and 6.9%.
Though wage growth expectations held firm at 3.0%, consumer sentiment around job security and unemployment took a negative turn. The perceived likelihood of a rise in unemployment over the next year surged to 39.4%—a marked jump and the highest since September 2023. This pessimism spanned across all age, income, and education groups.
Interestingly, while fewer people expect to lose their job involuntarily (down slightly to 14.1%), the likelihood of voluntarily quitting a job also dropped significantly, reaching its lowest point since July 2023. This trend suggests growing caution among workers amid broader economic concerns.
Additionally, confidence in finding new employment slipped slightly, with the probability of landing a new job within three months falling to 51.2%, staying below the 12-month average.
On the income front, households expect modest gains, with expected income growth ticking up to 3.1%. However, expectations around household spending growth rose more sharply, reaching 5.0%. This uptick, most pronounced among lower-income and less-educated households, could reflect growing cost pressures or an expectation of higher future expenses.
Credit conditions, however, showed signs of tightening. More households now report it’s harder to obtain credit compared to a year ago, and concerns about future credit access have intensified sharply. Nearly half (46.7%) now expect credit to become even less accessible in the year ahead—the highest level since June 2024.
Delinquency concerns are also on the rise. The average probability of missing a minimum debt payment jumped to 14.6%, the highest since the early pandemic days of April 2020. Younger and less-educated respondents reported the largest increases in concern.
While households’ current financial situations haven’t changed dramatically, their outlook for the coming year has worsened. Over a quarter now expect to be in a worse financial position by next year—a level not seen since late 2023.
Expectations around taxes also increased modestly, with households anticipating a 3.4% rise. Meanwhile, concerns about rising government debt have eased slightly, with expectations for its growth falling to a seven-year low of 5.0%.
Consumers are also less optimistic about the stock market. The share of respondents expecting stock prices to rise over the next 12 months fell to 37.0%, signaling a more cautious investment outlook.
For more information: https://www.newyorkfed.org/newsevents/news/research/2025/20250310