New York Fed Survey: Inflation Expectations Rise, Unemployment Concerns Increase

New York Fed Survey Insights

• 📈 Inflation expectations for one year out have risen to 3.4%, the highest since April 2025.
• 📊 The three-year and five-year inflation expectations remain at 3%, with the five-year outlook being the highest since May 2024.
• ⛽ Specific categories like food, gas, medical care, and rent are seeing increased inflation expectation growth.

Labor Market Trends

• 📉 Expectations for earnings growth have declined for a third consecutive month, reaching the lowest point since May 2021.
• ⚠️ Concerns about higher unemployment are increasing, with expectations rising to 41.1%, the highest since April 2025.
• 💼 Expectations for job loss have also increased for the fourth consecutive period.
• 🤝 Despite rising unemployment concerns, expectations for finding a job did increase, though they remain near pandemic lows.

Fed Policy and Economic Outlook

• 💡 New Fed Governor Steven Meyer suggests the neutral rate may be higher, influenced by supply-side policies.
• 🎯 The Fed is noted to be less concerned with short-term inflation expectations and more with the five-year outlook.
• ⚠️ A potential danger exists if the Fed's persistent 3% five-year inflation outlook shifts the economy's expectation of the target rate from 2% to 3%.
• 🏠 Myron believes falling rents could help shape inflation expectations and support a more aggressive return to neutral by the Federal Reserve.