The report landed during a government shutdown that's delaying critical economic releases
The Federal Reserve Bank of New York’s latest Survey of Consumer Expectations revealed a rise in short-term inflation expectations and growing unease about the labor market’s future.
The survey, fielded from from September 1 through September 30, 2025, found that Americans’ median inflation expectations for the year ahead increased to 3.4%, up from 3.2% in August, while five-year-ahead expectations edged up to 3.0%. Three-year expectations held steady at 3.0%. The uptick was most pronounced among households with incomes under $50,000 and those with no more than a high school education.
Median year-ahead food price expectations jumped to 5.8%, the highest since March 2023, and rent expectations climbed to 7.0%.
Meanwhile, home price growth expectations remained unchanged at 3.0% for the fourth straight month, offering a measure of stability for the mortgage sector.
The Commerce Department’s August data indicated that the core personal consumption expenditures (PCE) price index—excluding volatile food and energy—rose 0.2% for the month, matching forecasts and July’s pace. The headline PCE index, which includes all items, posted a 0.3% monthly gain, nudging the annual inflation rate to 2.7%.
Labor market anxieties, however, intensified. The mean probability that the US unemployment rate will be higher in a year rose to 41.1%, and the perceived risk of losing one’s job ticked up to 14.9%.
"Labor market expectations continued to deteriorate with consumers reporting lower expected earnings growth, greater likelihoods of losing jobs, and a higher likelihood of a rise in overall unemployment," the NY Fed said.
Median one-year-ahead earnings growth expectations slipped to 2.4%, the lowest since April 2021.
Despite these concerns, the survey found a modest rebound in the perceived probability of finding a new job after a loss, up to 47.4% from August’s series low of 44.9%. Still, this figure remains well below the 12-month average.
The NY Fed’s report landed during the government shutdown which is delaying critical economic releases, including the September employment report. As the Federal Open Market Committee prepares for its late-October meeting, policymakers must weigh these survey findings alongside private-sector data.
The Fed cut its target rate last month amid concerns about job market weakness, but inflation remains stubbornly above the 2% target, a tension that continues to complicate rate decisions.
However, Sam Williamson, senior economist at First American, believes the central bank may prefer to hold steady until the flow of information resumes. “A similar dynamic played out during the 2018–19 shutdown, when data gaps contributed to the Fed’s decision to keep rates unchanged at its January meeting,” Williamson said.
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