Americans' expectations for future inflation edged down slightly in July while concerns about job security and unemployment rose, according to the latest Survey of Consumer Expectations released by the Federal Reserve Bank of New York's Center for Microeconomic Data. The survey, conducted throughout July 2026, showed households became less pessimistic about their finances even as labor market worries intensified. The mixed signals reflect an economy where price pressures are easing but employment anxiety is building.
Households' one-year inflation outlook fell by 0.1 percentage point to 3.6% in July, while expectations for three years ahead held steady at 3.3% and five-year projections remained at 3.0%. Gas price expectations jumped by 1.4 percentage points to 2.9% after a sharp June decline, and college cost expectations rose 0.1 percentage point to 5.8%. Meanwhile, medical care cost expectations dropped 0.5 percentage point to 8.9% and rent expectations fell 2.4 percentage points to 5.9%. Food price expectations stayed flat at 5.0%, and home price growth expectations remained unchanged at 3.2%.
Labor market expectations painted a darker picture. The average probability that unemployment would be higher one year ahead climbed 1.1 percentage points to 42.8%, with increases spread across all age and income groups. The perceived chance of losing one's job in the coming year rose 0.1 percentage point to 14.2%, though it stayed below the 12-month average of 14.5%. On a brighter note, the perceived likelihood of finding a new job if laid off increased 1.3 percentage points to 46.2%, with the sharpest gains among those with high school education or less and households earning under $50,000 annually. Expected wage growth held constant at 2.8%, above its trailing 12-month average.
Financial outlook indicators showed modest improvement despite labor market worries. Households reported better current financial situations compared to a year earlier, with fewer saying their finances had worsened and more reporting improvement. Looking ahead, the survey found a smaller share of respondents expecting their finances to deteriorate over the next year. The perceived probability that stock prices would rise in 12 months increased 0.5 percentage point to 41.4%, reaching the highest level since April 2021. Expectations for credit availability also brightened, with fewer households anticipating difficulty obtaining credit ahead. However, the average chance of missing a minimum debt payment in the next three months rose 1.2 percentage points to 12.0%, concentrated among lower-income households and those with limited college education.
The divergence between easing inflation expectations and rising unemployment concerns suggests households are navigating an economy in transition. According to the report, disagreement among respondents about future inflation decreased at all time horizons, indicating growing consensus that price pressures are moderating. At the same time, the broad-based increase in unemployment expectations signals widespread worry about labor market softening ahead. The improved stock market optimism and better financial situation assessments may reflect households benefiting from earlier wage gains and stabilizing prices, even as they grow more cautious about job prospects. The survey's panel design, which tracks the same roughly 1,300 household heads for up to 12 months, allows researchers to observe how individual expectations shift over time rather than relying on snapshots of different people.