A recent survey by the Federal Reserve Bank of New York reveals that while Americans are becoming less concerned about near-term inflation, worries about the job market and personal financial outlook remain elevated. The findings provide insight into household expectations for inflation, employment, and financial well-being amid ongoing economic uncertainty.

Near-Term Inflation Expectations Moderate

The October 2025 Survey of Consumer Expectations from the New York Fed shows that households now expect inflation over the next 12 months to moderate to 3.2%, down from 3.4% in September. Expectations for inflation three and five years into the future remain steady at 3%, indicating relative confidence in long-term price stability.

Federal Reserve officials note that these stable longer-term expectations are key to maintaining inflation control, as they influence current price-setting behavior across the economy.

Job Market Concerns Remain High

Despite easing inflation fears, Americans are increasingly focused on the labor market outlook. Survey respondents in October anticipated a higher year-ahead unemployment rate compared to September and expressed concerns about the difficulty of finding employment if they were to become unemployed.

• Concerns about future job opportunities were particularly pronounced among those under 60 and individuals with some college education.
• Interestingly, households reported being less worried about losing their current job compared to the previous month.

These findings suggest that while Americans feel relatively secure in their current employment, uncertainty about the broader job market and economic conditions persists.

Mixed Outlook on Personal Finances and Credit

The survey also found that households are more pessimistic about their current and future financial situation, even as access to credit has become easier:

• Respondents indicated that credit conditions should remain favorable in the near future.
• Expectations for future earnings and income were mixed, reflecting uncertainty in the labor market and broader economy.

Inflation Expectations for Commodities and Medical Costs

Americans’ expectations for commodity prices were also mixed:

• Respondents anticipated declines in gasoline and food prices.
• Expected year-ahead increases in medical costs reached the highest level since February 2023, highlighting ongoing concerns about healthcare expenses.

The survey was conducted during October, amid government shutdown concerns and heightened anxiety about the job market outlook.

Fed’s Policy Actions and Economic Implications

Last week, the Federal Reserve reduced its interest rate target by a quarter percentage point to the 3.75%-4.00% range, aiming to support the labor market while keeping monetary policy tight enough to reduce inflation, which remains well above the Fed’s 2% target.

Fed officials have emphasized that stable long-term inflation expectations provide confidence that price pressures will eventually moderate. The survey underscores the delicate balance policymakers face: supporting employment while maintaining price stability.

Key Takeaways for Consumers and Investors

1. Inflation expectations are easing in the near term, but longer-term expectations remain stable.
2. Job market concerns persist, particularly regarding future employment opportunities.
3. Personal financial outlook is mixed, with optimism tempered by rising healthcare costs.
4. Credit access is improving, offering potential support for consumer spending.

The NY Fed survey provides a crucial snapshot of household sentiment, offering insights into consumer expectations that can influence spending, investment, and monetary policy decisions.