Consumer Inflation Expectations Rise Amid Higher Gas Prices — Evening Brief – 04.07.26

U.S. consumers entered spring expecting somewhat higher inflation over the next few years and expressing more concern about job security, even as they remained cautiously optimistic about their ability to find work and access credit. 

According to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations, median one-year-ahead inflation expectations increased by 0.4 percentage points to 3.4%, while the three-year outlook edged up to 3.1%. Longer-term expectations remained unchanged at 3.0%, suggesting consumers still see inflation stabilizing over time. 

The shift was driven in part by a surge in gasoline price expectations, which climbed to their highest level since March 2022. At the same time, uncertainty around inflation rose across all time horizons, indicating a less anchored outlook among households. 

Labor market sentiment showed a mixed picture. The perceived probability of losing one’s job over the next 12 months increased to 14.4%, though it remains below the trailing 12-month average. Meanwhile, confidence in finding new employment improved, with the probability rising to 45.9%. 

Consumers also expressed greater willingness to change jobs voluntarily, with that probability climbing to 18.3%. 

Household financial expectations were largely unchanged. Income growth expectations held steady at 2.9%, while expected spending growth increased to 5.1%, suggesting continued pressure on household budgets as spending outpaces income. 

Credit conditions showed signs of easing, with more respondents reporting improved access to credit. However, the perceived probability of missing a debt payment rose to 12.3%, particularly among older and lower-income households.