Americans' inflation fears ease while job worries mount: NY Fed

Consumers weren't bracing for a worsening inflation flare-up in May, a relief that higher prices aren't becoming embedded in household expectations.

• The bad news: Even amid resilient hiring, Americans are less confident about jobs and their own finances.

Driving the news: The New York Fed's Survey of Consumer Expectations showed year-ahead inflation expectations fell a tick, to 3.5% in May. Three-year expectations held at 3.1%, while five-year expectations remained at 3%.

• Beneath the surface, households reported greater concern about layoffs and worsening financial conditions.

Why it matters: Households are not building permanently higher inflation into their outlook, even with prices for food, rent and medical care still expected to rise sharply.

• But worker sentiment is deteriorating, in step with employee confidence falling to a record low.

Zoom in: Consumers' perceived probability of losing a job rose in May, while the perceived probability of finding a new job after a layoff fell to its lowest level since December 2025.

• The perceived probability of missing a minimum debt payment over the next three months jumped to 12.6%, while the share of households saying they are worse off financially than a year ago rose to its highest level since January 2023.

The other side: Expected quits rose to the highest since early 2023, suggesting that workers still see some job opportunity.

What to watch: The survey was fielded through May, before conflict reescalated in the Middle East.